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On January 29, the CFPB released a report on mortgage complaints, and a corresponding blog post, which provide a high-level overview of the mortgage complaints received by the Bureau during the last 24 months. According to the report, mortgage complaints accounted for 11 percent, or approximately 71,000 complaints, of the total complaints the Bureau received from November 2016 through October 2018. An analysis of the complaints indicated that 42 percent of them had to do with issues concerning the payment process, while 36 percent had to do with difficulties in paying off the mortgage. Consumer complaints regarding payment process problems describe a variety of issues, including misapplied payments and escrow analysis inaccuracies. The CFPB notes that complaints from consumers struggling to pay their mortgages often state they have difficulty receiving assistance after a financial hardship, illness, or a natural disaster.
Additional highlights of the report include: (i) the number of mortgage complaints received between August 2018 and October 2018 was 15 percent lower than the number of mortgage complaints received during the same time period in 2017; (iii) 50 percent of mortgage complaints relate to conventional mortgages; and (iii) adjusted for population, the largest mortgage complaint volumes came from the District of Columbia, Maryland and New Jersey.
On January 24, the CFPB’s Office of Servicemember Affairs (OSA) released an annual report, which highlights issues facing military consumers based on complaints submitted by servicemembers, veterans, and their families (collectively “servicemembers”). The OSA report covers the period between April 1, 2017 and August 31, 2018, during which the Bureau received approximately 48,800 military complaints. Some key takeaways from the OSA report are as follows:
- The largest category of servicemember complaints focused on credit reporting, with 37 percent of total servicemember complaints in this area. The report notes that the Department of Defense’s new security clearance process increases the likelihood that a servicemember’s poor credit score could result in losing a security clearance, and by extension being separated from the military.
- After credit reporting, debt collection was the next most complained about issue. Most servicemembers’ debt collection complaints alleged that the servicemember did not owe the debt or that the debt collector failed to respond to written requests for information. In particular, the report states that some debt collectors have inappropriately contacted servicemembers’ chains of command in an attempt to obtain payment.
- For mortgage debt, the largest category of complaints arose from challenges in the payment process—in particular issues related to loan modifications, collections, communicating with the servicemember’s “single point of contact,” escrow, and servicing transfers. These process-focused complaints were closely followed by overall difficulties in being able to afford mortgage payments.
- For credit cards, the greatest concentration of complaints were around problems with purchases on statements (i.e. fraudulent/unauthorized charges, billing frustrations, and difficulties in challenging charges directly with the credit card issuer). Notably, while the report acknowledges the October 2017 Military Lending Act compliance date for credit card issuers, it does not specifically break out MLA-related complaints; rather, the report notes that the Bureau has received “some complaints from servicemembers demonstrating confusion with respect to how and when creditors are applying the MLA’s protections to credit card accounts.”
- For auto lending, the leading category of complaints arose from managing the loan or lease, including application of payments and late fees. Unique to servicemembers, the report highlights that products like GAP can become void if a servicemember takes a car overseas (for example, to use while on deployment).
- For student lending, two-thirds of complaints arose from challenges in making payments and enrolling in payment plans, in particular issues with enrolling and recertifying eligibility for income-driven repayment.
- Finally, in the payday loan space, since 2016 servicemember complaints have decreased drastically and are now equal with non-servicemember complaints (as a percentage of total complaint volume); previously, servicemembers were almost twice as likely to complain about payday loan products.
On October 23, the CFPB released its Complaint snapshot: 50 state report, which covers complaints received by the Bureau from January 2015 through June 2018. According to the report, the Bureau has received more complaints from consumers in California than any other state, followed by Florida and Texas. Other highlights of the report include: (i) issues related to credit reporting received the most complaints in 2017, comprising 31 percent of all submitted complaints; (ii) the Bureau averaged over 27,000 complaints per month from January 2017 through June 2018; and (iii) complaints about prepaid cards trended upward the beginning half of 2018, while student loan, payday loan, credit repair, and money transfer complaints all trended lower.
On October 16, the FTC announced the launch of a new interactive online format that will release aggregated consumer complaint data on a quarterly basis. The interactive dashboards explore aggregated statistics about fraud, identity theft, and other consumer protection problems, and also provide a state-by-state breakdown of issues. As part of the new initiative, the FTC’s Consumer Protection Data Spotlight focuses on the rise in consumer complaints concerning gift card scams, which are now the most reported method of payment for imposter scams. According to the FTC, fraud report payments using gift and reload cards experienced a 270 percent increase (from 7 percent up to 26 percent), which can be attributed to quick access to cash, largely irreversible transactions, and anonymity. As of September 2018, the FTC reports that reported losses involving the use of gift and reload cards has already reached $53 million.
FTC announces settlements with website operators over the sale of fake documents allegedly used for fraud and identity theft
On September 18, the FTC announced three proposed settlements with the operators of websites who allegedly violated the FTC Act’s prohibition against unfair practices by selling fake financial documents used to facilitate identity theft and other frauds, including loan and tax fraud. As previously covered in InfoBytes, identity theft was the second largest category of consumer complaints reported in 2017 according to the FTC. The FTC brought charges against the first defendant, alleging the defendant engaged in the sale of fake pay stubs, bank statements, and profit-and-loss statements, as well as providing a product that allowed customers to edit existing (and authentic) bank statements. The second defendant’s charges include the alleged sale of fake pay stubs, auto insurance cards, and utility and cable bills, while the allegations against the third defendant also include the sale of fake tax forms, bank statements, and verifications of employment. While the defendants’ websites claimed that the fake documents were sold for “‘novelty’ and ‘entertainment’ purposes,” the FTC asserts that the defendants “failed to clearly and prominently mark such documents as being for such purposes and did not state on the documents themselves that they were fake.”
Under the terms of the proposed settlement agreements (see here, here, and here), monetary judgments are imposed against the defendants, who also are permanently prohibited from advertising, marketing, or selling similar fake documents.
On June 4, the New York Attorney General, Barbara Underwood, along with fourteen other state Attorneys General submitted a comment letter in response to the CFPB’s Request for Information (RFI) on the public reporting of consumer complaints, previously covered by InfoBytes here. The Attorneys General highlight the utility of the CFPB’s consumer complaint database, stating it “has been an invaluable resource for identifying trends and patterns,” and noting its usefulness in investigations into certain companies “whose misconduct was initially brought to [their] attention through a critical mass of complaints filed with the CFPB.” The letter also comments on the database’s benefit to the public for (i) empowering consumers to educate themselves; (ii) incentivizing companies to treat consumers fairly; and (iii) potentially revealing patterns of widespread misconduct. The coalition concludes the letter by urging the CFPB to maintain the public database.
Additionally, on the same day, the New Jersey Attorney General, Gurbir Grewal, responded to the same RFI with similar sentiments but also emphasized that eliminating or reducing the public availability of the database “would conflict with the open-government principles of the Freedom of Information Act” (FOIA) because FOIA requires government agencies to proactively disclose frequently requested records. According to Grewal, the Bureau receives a substantial number of requests for consumer complaint records and this number will likely increase without the public database.
On May 31, the CFPB released a complaint snapshot on debt collection, which provides a high-level overview of trends from all consumer complaints and additional details related to debt collection complaints. The CFPB reports that it has received approximately 1,492,600 total complaints as of April 1, and that “credit or consumer reporting” was the most-complained-about category in March 2018. As for debt collection, the Bureau received approximately 400,500 debt collection complaints since July 21, 2011, 27 percent of the total number of complaints. The report also highlights common themes among debt collection complaints, including (i) debts being listed on credit reports without prior written notice of the existence of the debt; (ii) debt collection companies not responding to requests for additional information; and (iii) various communication tactics used by debt collection companies, including frequent and repeated calls, calls before 8 a.m. and after 9 p.m., and calls after requests for no further telephone contact.
On April 30, three Democratic Senate Banking Committee members released a report addressing publicly available complaints the CFPB received regarding the 2017 data breach announcement by a national credit reporting agency. In a letter to the CFPB, which accompanied the release of the report, the Senators encouraged the Bureau to “hold [the credit reporting agency] accountable and act quickly and decisively to protection the millions of consumers harmed by the breach.” Additionally, the Senators make a plea for the CFPB to continue to keep consumer complaints public, citing to recent remarks by Mulvaney that the database would soon be removed from public view. According to the report, within six months of the data breach announcement—which reportedly affected 143 million American consumers—the CFPB received over 20,000 complaints against the company. Of the 20,000 complaints, the issues consumers mentioned include (i) “improper use of a credit report after the breach”; (ii) “incorrect information on credit report”; (iii) “[Company]’s inadequate assistance in resolving problems after the breach”; and (iv) “[Company]’s credit monitoring services, fraud alerts, security freezes, and other identity theft protection products.” The report also cites to specific narratives from consumer complaints that were available through the CFPB’s consumer complaint database.
On April 11, the CFPB released its twelfth (and apparently final) Request for Information (RFI) in a series seeking feedback on the Bureau’s operations. This RFI solicits public comment to assist the Bureau in assessing its handling of consumer complaints and consumer inquiries. Pursuant to the Dodd-Frank Act, the CFPB is required to “facilitate the centralized collection of, monitoring of, and response to consumer complaints regarding consumer financial products or services.” According to the RFI, a “consumer complaint” relates to an issue a consumer has with an identifiable entity, whereas a “consumer inquiry” is a consumer request for information from the CFPB regarding a financial product or service, a CFPB action, or the status of a complaint. While the Bureau is seeking feedback on all aspects of its consumer complaints and consumer inquiries processes, the RFI specifically seeks comments related to (i) how the Bureau distinguishes between complaints and inquiries, including if there should be a process for companies to reclassify consumer submissions; (ii) the complaint submission process, including the channels of submission and whether consumers should be allowed to authorize a third-party to submit on their behalf; and (iii) whether the Bureau should develop a process for companies to provide responses to consumer inquiries. The RFI is expected to be published in the Federal Register on April 16. Comments will be due 90 days from publication.
On March 7, the CFPB released its seventh Request for Information (RFI) in a series seeking feedback on the Bureau’s operations. This RFI solicits public comment regarding “the overall efficiency and effectiveness of its rulemaking processes.” The RFI emphasizes that the Bureau is not seeking information related to the particular content of any proposed or final rule—existing rules will be addresses in separate RFIs—or information related to elements of the rulemaking process which are required by law. Specifically, the RFI requests feedback regarding the discretionary aspects of the Bureau’s rulemaking processes, including (i) mechanisms (such as RFIs) the Bureau uses to gather information from stakeholders in advance of initiating a rulemaking; (ii) the Small Business Regulatory Enforcement Fairness Act (SBREFA) panel process; (iii) the content and structure of notices of proposed rulemaking (NPRMs); (iv) the NPRM comment process, including time periods and feedback mechanisms; and (v) the content and structure of notices of final rules. The RFI is expected to be published in the Federal Register on March 9. Comments will be due 90 days from publication.
- Michelle L. Rogers to discuss "Preparing for servicing exams in the current regulatory environment" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- Jon David D. Langlois to discuss "Regulatory risks of convenience fees" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- APPROVED Webcast: NMLS Annual Conference & Ombudsman Meeting: Review and recap
- Brandy A. Hood to discuss "Keeping your head above water in flood insurance compliance" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- Melissa Klimkiewicz to discuss "Servicing super session" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- Jessica L. Pollet to discuss "Law & compliance speedsmarts" at the American Financial Services Association Law & Compliance Symposium
- Daniel P. Stipano to discuss "Lessons learned from recent high profile enforcement actions" at the Florida International Bankers Association AML Compliance Conference
- Moorari K. Shah to provide "Regulatory update – California and beyond" at the National Equipment Finance Association Summit
- Sasha Leonhardt and John B. Williams to discuss "Privacy" at the National Association of Federally-Insured Credit Unions Spring Regulatory Compliance School
- Aaron C. Mahler to discuss "Regulation B/fair lending" at the National Association of Federally-Insured Credit Unions Spring Regulatory Compliance School
- Heidi M. Bauer to discuss "'So you want to form a joint venture' — Licensing strategies for successful JVs" at RESPRO26
- Jonice Gray Tucker to discuss "Small business & regulation: How fair lending has evolved & where are we heading?" at CBA Live
- Jonice Gray Tucker to to discuss "DC policy: Everything but the kitchen sink" at CBA Live
- Daniel P. Stipano to discuss "Lessons learned from ABLV and other major cases involving inadequate compliance oversight" at the ACAMS International AML & Financial Crime Conference
- Daniel P. Stipano to discuss "A year in the life of the CDD final rule: A first anniversary assessment" at the ACAMS International AML & Financial Crime Conference
- Moorari K. Shah to discuss "State regulatory and disclosures" at the Equipment Leasing and Finance Association Legal Forum
- Hank Asbill to discuss "Creative character evidence in criminal and civil trials" at the Litigation Counsel of America Spring Conference & Celebration of Fellows
- Hank Asbill to discuss "Pay no attention to the man behind the curtain: Addressing prosecutions driven by hidden actors" at the National Association of Criminal Defense Lawyers West Coast White Collar Conference
- Daniel P. Stipano to discuss "Keep off the grass: Mitigating the risks of banking marijuana-related businesses" at the ACAMS AML Risk Management Conference
- Daniel P. Stipano to discuss "Mid-year policy update" at the ACAMS AML Risk Management Conference
- Benjamin W. Hutten to discuss "Requirements for banking inherently high-risk relationships" at the Georgia Bankers Association BSA Experience Program