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On July 12, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing entitled “An Overview of the Credit Bureaus and the Fair Credit Reporting Act” to discuss the scope and enforcement of the Fair Credit Reporting Act (FCRA), the measures undertaken by the CFPB and the FTC to oversee credit bureau data security and accurate credit reporting, and other laws and regulations as they pertain to credit bureaus. Committee Chairman Mike Crapo, R-Idaho, opened the hearing by discussing the need to understand the “current state of data security, data accuracy, data breach policy” given consumers’ increased reliance on technology and recent cybersecurity incidents.
Associate Director for the Division of Privacy and Identity Protection at the FTC, Maneesha Mithal, discussed in prepared remarks the FTC’s role in implementing, enforcing, and interpreting the FCRA, as we all as the importance of educating consumers and businesses about FCRA requirements. According to Mithal, the FCRA continues to be a “top priority” for the FTC as the consumer reporting system evolves and new technologies emerge. Mithal discussed consumer reporting agency (CRA) FCRA compliance requirements concerning, among other things, dispute resolution processes, furnisher obligations, and credit reporting accuracy. Specifically, Mithal commented on the FTC’s more than 30 FCRA enforcement actions, in addition to the more than 60 law enforcement actions taken against companies for allegedly failing to implement reasonable data security practices. Mithal also touched upon the FTC’s business guidance and consumer education efforts concerning FCRA rights and obligations.
Assistant Director for Supervision Policy at the Bureau, Peggy Twohig, similarly discussed the Bureau’s authority over CRAs and furnishers with respect to the agency’s supervisory and enforcement authority, and noted, among other things, that while the agency possesses broad authority to promulgate rules as required to enforce the FCRA, it lacks rulemaking authority under certain sections of the FCRA related to red flags and the disposal of records, which fall under the FTC’s purview. Twohig further commented on the Bureau’s efforts to educate consumers on a variety of topics, including data breaches, credit freezes, and credit and identity monitoring.
On April 4, the CFPB released its eleventh 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 the overall efficiency and effectiveness of its consumer financial education programs.” Pursuant to the Dodd-Frank Act, the CFPB develops education programs to educate and empower consumers to make better informed financial decisions, and to improve consumers’ financial literacy. The Bureau develops programs for the general public as well as programs designed for special populations. While the Bureau is seeking feedback on all aspects of its financial education initiatives, the RFI specifically seeks comments related to (i) the topics and delivery functions of the programs; (ii) the effectiveness of the programs, including how the Bureau should measure program success; and (iii) how to avoid duplication and improve coordination with other federal agencies. The RFI is expected to be published in the Federal Register on April 9. Comments will be due 90 days from publication.
On March 1, the FTC issued its annual summary on consumer complaints received by the agency over the past year, highlighting trends in various categories such as fraud and identity theft. The report, Consumer Sentinel Network Data Book 2017 (2017 Data Book), provides category breakdowns and national and state specific data extrapolated from the Consumer Sentinel Network (CSN)—a secure online database of millions of consumer complaints available only to law enforcement agencies. In compiling the 2017 Data Book, CSN collected and analyzed nearly 2.7 million consumer complaints—a decrease from the nearly 3 million complaints it received in 2016. However, total loses reported for 2017 increased by $63 million to nearly $905 million in total losses due to fraud.
The 2017 Data Book provides a breakdown of complaints sorted into 30 top categories. Highlights include the following:
- States. Florida, Georgia, and Nevada were the top states for fraud complaints, while Michigan, Florida, and California were the top states for identity theft complaints.
- Top categories. While there were 1.1 million fraud reports filed overall (42.5 percent of all reports), debt collection remained the top complaint in 2017, amounting to 22.7 percent of all complaints. Identity theft (13.8 percent) and imposter scams (13 percent) rounded out the top three. “While we received fewer overall complaints in 2017, consumers reported losing more money to fraud than they did the year before,” said Tom Pahl, Acting Director of the FTC’s Bureau of Consumer Protection in a press release issued by the agency. “This underscores the importance of the FTC’s work in educating consumers and cracking down on the scammers who try to take their money.” Rounding out the top ten consumer complaints for 2017 were: telephone and mobile services; banks and lenders; prizes, sweepstakes, and lotteries; shop-at-home and catalog sales; credit bureaus, information furnishers, and report users, auto related complaints, and television and electronic media.
- Military. Fraud and identify theft were the largest category of complaints from military consumers—the majority reporting imposter scams, credit card fraud, and bank fraud. Military retirees and veterans submitted the highest number of reports.
- Fraud losses by age. The 2017 Data Book includes data broken out by age groups for the first time. Younger consumers aged 20-29 reported losing money to fraud more than consumers over age 70, but for older consumers who reported losing money, the median amount lost was greater.
Additional information about the 2017 Data Book is available here.
On February 12, the CFPB released its five-year strategic plan, which establishes the agency’s long-term strategic goals with corresponding objectives and achievement strategies. The strategic plan also introduces a new stated mission for the CFPB, which is based on Sections 1011(a) and 1013(d) of the Dodd-Frank Act:
“To regulate the offering and provision of consumer financial products or services under the Federal consumer financial laws and to educate and empower consumers to make better informed financial decisions.”
The new mission focuses on regulation and education but is silent on enforcement, as compared to the Bureau’s previous mission:
“The CFPB helps consumer financial markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.”
In addition to the mission, with the exception of the achievement strategies, the plan’s goals and corresponding objectives are all also restatements of various sections of title X of the Dodd-Frank Act. According to the plan, the Bureau will act with “humility and moderation” in achieving the three stated goals, which are:
- “Ensure that all consumers have access to markets for consumer financial products and services.”
- “Implement and enforce the law consistently to ensure that markets for consumer financial products and services are fair, transparent, and competitive.”
- “Foster operational excellence through efficient and effective processes, governance and security of resources and information.”
Notable, are the strategies the Bureau has outlined to achieve its goals and objectives. Among others, these strategies include, (i) reviewing individual regulations for clarification opportunities and considering alternative approaches to regulation; (ii) enhancing institutional regulatory compliance to protect consumers from discrimination and UDAAP violations; (iii) focusing enforcement resources on institutions and product lines that pose the greatest risk to consumers; (iv) promoting the development of compliance technology solutions. The strategic plan also focuses on internal strategies to achieve the Bureau’s mission, such as, maintaining a responsive cybersecurity program and promoting budget discipline.
The final strategic plan is a significant rewrite of the draft strategic plan published in October 2017 under the Bureau’s previous leadership (covered by InfoBytes here). The final plan represents a “more coherent strategic direction” compared to the draft version, according to a letter written by acting Director Mick Mulvaney, which accompanies the final plan.
On the same day as the strategic plan was released, President Trump issued his 2019 budget proposal which outlines a plan to place the CFPB under the congressional appropriations process, cut the Bureau’s budget by more than $6 billion over 10 years, and restrict the Bureau’s enforcement authority of federal consumer financial laws. More InfoBytes details about the budget proposal are available here.
On November 21, the CFPB released a report summarizing findings from a qualitative study about consumers’ experiences with overdraft programs. The study consisted of one-on-one interviews by telephone with 88 individual consumers from May 2014 through June 2014 (the report does not comment on the three-year gap between the interviews and the release). According to the CFPB, the study was not designed to identify systematic trends but instead to provide an in-depth review of consumers’ experiences. The report concluded that consumers need a wide range of educational resources to support the varying experiences and perceptions they have with overdraft services. For example, the report notes that while some consumers commented on unexpected overdraft fees after miscalculating the timing of transaction processing, others noted their intentional use of overdraft options to make purchases or pay bills. The CFPB encouraged financial educators to develop their own overdraft resources with the awareness that consumers may use and interpret programs in varying ways and provided a list of CFPB resources available for use.
On November 22, the CFPB released a report focusing on ways financial institutions can expand and improve services to Limited English Proficient consumers (LEP consumers) who often face challenges related to language access and financial literacy. According to findings in the report, LEP consumers often have trouble accessing and interpreting financial products and services, as well as difficulty completing financial documents, managing bank accounts, resolving problems, and accessing financial education. The Bureau’s report—which is compiled from information gathered in interviews with financial institutions, trade associations, nonprofit advocacy groups, and federal agencies, as well as secondary research—presents five common approaches used in the industry to address issues facing LEP consumers: (i) assessing the language needs of consumers; (ii) offering centralized technical support for translation and interpretation initiatives; (iii) developing systems to ensure accuracy of translations and interpretations; (iv) providing training for staff and contractors to ensure language and cultural competencies; and (v) offering platforms to interact with LEP consumers.
The report follows the November 16 release of the CFPB’s final version of its Language Access Plan designed to continue efforts to provide non-English speaking persons access to its own programs and services, including offering translated consumer-facing brochures and handling complaints from consumers in multiple languages. (See previous InfoBytes coverage here.)
CFPB Requests Comments on Overdraft Disclosures; CFPB Announces Final Language Access Plan; Holds Ceiling at $12.00 for Allowable FCRA Charges
On November 15, the CFPB published a request for comment on a proposal to the Office of Management and Budget (OMB) to conduct online testing of point of sale/ATM (POS/ATM) overdraft disclosure forms. In the request, the Bureau invited comments on, (i) “[w]hether the collection of information is necessary for the proper performance of the functions of the Bureau, including whether the information will have practical utility”; (ii) “[t]he accuracy of the Bureau’s estimate of the burden of the collection of information, including the validity of the methods and the assumptions used”; (iii) “[w]ays to enhance the quality, utility, and clarity of the information to be collected”; and (iv) “[w]ays to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.” Comments must be received by January 16, 2018.
On November 16, the CFPB released the final version of its Language Access Plan (Plan) to provide non-English speaking persons access to its programs and services. The Plan highlights two key language access functions of the Bureau: offering translated consumer-facing brochures and handling complaints from consumers in multiple languages. The Bureau originally proposed the Plan in 2014 (covered previously by InfoBytes). The final Plan is current as of November 13, 2017.
CFPB also announced on November 16 that the maximum allowable charges for certain disclosures under the Fair Credit Reporting Act (FCRA) will remain at the current level. Each year the original amount referenced in the FCRA must be readjusted (and rounded to the nearest fifty cents) based on the annual percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U). The amount for 2018, based on the annual percentage increase in the CPI-U, remains unchanged at $12.00.
On November 7, the Chairman of the FDIC, Martin J Gruenberg, addressed the Local Initiatives Support Corporation (LISC) in New York, New York regarding financial inclusion and expanding economic opportunity for the underbanked. In his speech, Gruenberg discussed the agency’s most recent report, FDIC National Survey of Unbanked and Underbanked Households, which found that nearly 27 percent of American households are unbanked or underbanked. Gruenberg also highlighted the initiatives the agency has undertaken to address the results of this report, including (i) creating access to “Safe Accounts,” which are electronic transaction accounts with low costs; (ii) conducting research on mobile financial services and how technology can lead to more sustainable banking relationships; and (iii) continuing financial education initiatives with a particular focus on youth savings.
OCC to Host Workshop for Bank Directors in December; FDIC, CFPB Announce Webinar to Discuss Financial Education Resources
On October 23, the OCC announced it will host a workshop December 4-6 in Albuquerque, New Mexico, for directors, senior management team members, and other key executives of OCC-supervised national community banks and federal savings associations. The “Building Blocks for Directors” workshop will (i) focus on the duties and cores responsibilities of directors and management; (ii) discuss major laws and regulations; and (iii) provide insight on the examination process.
Also on October 23, the FDIC and CFPB announced they will co-host a webinar on November 15 to discuss financial education resources designed to help people with disabilities make informed financial decisions. Topics of discussion will include recent enhancements to the FDIC’s Money Smart curriculum and the CFPB’s Your Money, Your Goals toolkit.
On July 19, the FTC will host a free public workshop in San Antonio, entitled 2017 Military Consumer Financial Workshop: Protecting Those Who Protect Our Nation, to educate military consumers on financial issues and scams that they may face.
The workshop with consist of five panel discussions led by FTC personnel as well as military consumer advocates, attorneys, legal services clinics, industry representatives, and government agencies. The panels will include the following topics:
- auto purchase, financing, and leasing;
- lending including student loans and installment loans;
- debt collection;
- legal rights and remedies; and
- financial literacy and capability.
Additionally, the workshop will include presentations on online promotions and protecting sensitive information, as well as encouraging financial readiness along with financial resources for military consumers.
The FTC will hold the workshop at Trinity University in the Chapman Auditorium beginning at 8:30 am and preregistration is not required.
- Sherry-Maria Safchuk to discuss UDAAP at an American Bar Association webinar
- Jeffrey P. Naimon to discuss "What to expect: The new administration and regulatory changes" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Jonice Gray Tucker to discuss “The future of fair lending” at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Steven R. vonBerg to discuss "LO comp challenges" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Michelle L. Rogers to discuss "Major litigation" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Michelle L. Rogers to discuss “The False Claims Act today” at the Federal Bar Association Qui Tam Section Roundtable