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CFPB Issues 19th Edition of its Supervisory Highlights

michaelchristians • September 20, 2019

Yesterday, the Consumer Financial Protection Bureau (CFPB) issued the latest edition of its supervisory highlights which generally covers the examination period between December 2018 and March 2019. This is an important document for all financial institutions to review on a regular basis. It provides insight as to observed compliance deficiencies across the industry. It also serves as a friendly reminder of those smaller compliance requirements that get lost in the shadows of major rulemakings. Below is a high-level overview of the report by category.

Consumer Lending
The CFPB has observed the sale of guaranteed asset protection (GAP) coverage in connection with low loan-to-value automobile loans that generally will not benefit from the product. The CFPB considers this an abusive act or practice because it takes advantage of a consumer’s lack of understanding about GAP coverage.

Credit Cards
Financial institutions are reminded of the following when it comes to credit card accounts:
• The open-end advertising requirements found in §1026.16 of Regulation Z apply to credit card accounts, including additional disclosures in connection with an advertisement that contains a trigger term
• Generally, a card issuer may not offset credit card indebtedness against funds on deposit with the issuer. However, the issuer may enforce a consensual security interest so long as very specific requirements are met

Debt Collection
In July 2013, the CFPB issued a bulletin regarding unfair, deceptive and abusive acts and practices in the collection of consumer debts. The supervisory highlights reminds financial institutions of the following from that bulletin:
• Do not threaten any action that is not intended or that the financial institution does not have the authorization to pursue, such as false threats of lawsuit, prosecution or imprisonment for the non-payment of debt
• Do not attempt to collect any additional amount in connection with a debt that is not expressly authorized by the agreement or permitted by law

Fair Credit Reporting
The CFPB identified several compliance deficiencies with regard to the following requirements found in the Fair Credit Report Act (Regulation V):
• If a consumer disputes the accuracy of information reported by a financial institution to a consumer reporting agency (CRA), the financial institution must generally investigate the dispute within 30 days. The financial institution must also notify the CRA that the reported information is under dispute. If the reported information is found to be inaccurate, the financial institution must provide necessary corrections/updates to the CRA
• §1022.42 requires financial institutions to have policies and procedures in place concerning the accuracy and integrity of information furnished to a CRA. In developing these policies and procedures, financial institutions should consider the interagency guidelines found in Appendix E

The latest edition of the supervisory highlights may be found on the CFPB’s website at www.consumerfinance.gov. For more information, please contact Michael Christians Consulting, LLC at michael@mchristiansconsulting.com.

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