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CFPB’s Latest Supervisory Highlights Points to Compliance Deficiencies in Auto Lending
Michael Christians • October 23, 2024
On October 7th, the Consumer Financial Protection Bureau (CFPB) issued the fall 2024 edition of its supervisory highlights publication. The report covers several compliance deficiencies uncovered by the Bureau in connection with auto loan financing. Pay close attention to the following list to ensure that your financial institution does not have any of the same weaknesses in your auto lending program:
- Misleading advertising - mailing prescreened advertisements promoting rates "as low as" a specified APR that the intended consumers had no reasonable chance of qualifying for
- Failing to accurately disclose an applicable prepayment penalty in the loan agreement
- Wrongful repossession activities - failing to cancel repossession orders when consumers had brought their loan current and repossessing automobiles for which the financial institution had not perfected its lien
- Allocating payments in a different order than that outlined in the borrower's loan agreement, resulting in unfair late fees
- Failing to timely deliver the title to a borrower who had recently paid off their loan with the financial institution
- Collecting a fee for an add-on product (such as GAP coverage) that the borrower did not agree to purchase
- Imposing onerous requirements on a borrower to cancel a previously purchased add-on product
- Inaccurately calculating refund amounts in connection with add-on products, or failing to issue a refund altogether
- Reporting inaccurate information about a borrower's loan to a consumer reporting agency and failing to timely update the reported information once the inaccuracy was discovered
You can access the supervisory highlights here.
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5438 South Prairie View Drive
West Des Moines, IA 50266
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319-325-1171
michael@mchristiansconsulting.com
Michael Christians Consulting, LLC
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