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CFPB Releases Report on Consumers’ Overdraft Experiences
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.
CFPB Reports on Financial Institution Outreach to Limited English Proficient Consumers
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 Publishes Notices and Requests for Comment Concerning Collection of Consumer Complaints
On November 28, the CFPB published two notices of its intention to obtain OMB approval to continue its existing consumer complaint collection activities using its “Consumer Response Intake Form” and “Generic Information Collection Plan for Consumer Complaint and Information Collection System (Testing and Feedback).” According to the CFPB, use of the forms allows for electronic complaint submission on the Bureau’s website and streamlines the complaint process for consumers. Comments on the agency’s notices (CFPB-2017-0035 and CFPB-2017-0036) must be received by December 28, 2017.
Federal Reserve Governor Calls for Collaboration Between Regulators, Banks, Data Aggregators, and Fintech Firms for Financial Data Sharing Standards
On November 16, Federal Reserve Governor Lael Brainard spoke at a fintech conference sponsored by the University of Michigan regarding consumers’ right to understand and control how their financial data is used by third-party aggregators, and in developing fintech technology. “There's an increasing recognition that consumers need better information about the terms of their relationships with aggregators, more control over what is shared, and the ability to terminate the relationship,” Brainard noted. “Consumers should have relatively simple means of being able to consent to what data are being shared and at what frequency. And consumers should be able to stop data sharing and request the deletion of data that have been stored.”
Brainard emphasized that regulators, data aggregators, bank partners, and fintech developers should jointly develop a common, consistent message for how customer data is shared and protected within the fintech space and “other areas experiencing significant technological change.” As previously reported in InfoBytes, on October 18, the CFPB issued principles concerning the security and transparency of financial data sharing when companies—including fintech firms—get authorization from consumers to access their account data that reside in separate organizations to provide products and services.
CFPB Fines Loan-Servicing Software Company $1.1 Million for Flaws Leading to the Reporting of Inaccurate Consumer Information
On November 17, the CFPB ordered a loan-servicing software company to pay a $1.1 million penalty for errors that resulted in the company furnishing incorrect consumer information related to over one million borrowers to the credit reporting agencies. The consent order alleges that the company violated the Consumer Financial Protection Act when its third-party software application generated and furnished inaccurate and incomplete information to consumer reporting agencies because of known software defects. The company allegedly did not share the existence of the defects with its auto-lender clients. In addition to the civil money penalty, the company was ordered to: (i) explain its errors to its clients; (ii) fix the faulty software; and (iii) provide the Bureau with a compliance plan outlining how it plans to identify and fix the defects, as well as ensure that the software is capable of reporting accurate information.
CFPB Initiates Complaint Against Company for Deceptive, Unfair, and Abusive Loan Collection Practices
On November 15, the CFPB announced it had filed a complaint against a Texas-based service provider, alleging that it had assisted in the collection of loans that were, in whole or in part, void under state law. The complaint filed in the U.S. District Court for the District of Montana alleges that the service provider, which provided services to three tribal lending entities engaged in the business of extending online installment loans and lines of credit, along with two companies responsible for the collection process (collectively defendants), assisted in the collection of loans that consumers were not legally obligated to pay based on identified states’ usury laws or licensing requirements. Although the specific claims vary by defendant, the complaint alleges that the defendants engaged in deceptive, unfair, and abusive acts and practices in violation of the Consumer Financial Protection Act (CFPA) by:
- misrepresenting that consumers were responsible for money owed on loans that were void in whole or in part, or did not exist, because the loans were void under state licensing or usury laws (voided loans);
- demanding repayment from consumers on voided loans by issuing “demand letters,” electronically debiting funds from consumer bank accounts, and placing phone calls to consumers;
- failing to disclose to consumers that defendants had no legal right to collect on certain voided loans and that consumers were not legally obligated to repay the loans;
- causing injury to consumers by servicing and collecting on the voided loans;
- taking advantage of consumers’ “lack of understanding” regarding the voided loans; and
- providing assistance in, or administering, the origination and collection of the voided loans.
The CFPB is seeking monetary relief, civil money penalties, injunctive relief, and a prohibition of the service provider’s ability to commit future violations of the CFPA.
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.
50-State Class Action Complaint Filed Against Credit Reporting Company in Response to September Data Breach Announcement
On November 10, plaintiffs, and the members of the class and subclasses they seek to represent, filed a complaint in the Northern District of Georgia against a major credit reporting company, consolidating individual suits filed against the company since September in each of the 50 states and the District of Columbia. The plaintiffs allege that the company’s data breach (covered previously in InfoBytes)—in which hackers exploited a website application vulnerability to access names, Social Security numbers, birth dates, addresses, driver’s license numbers, as well as roughly 209,000 credit card numbers—has led to, among other things, identity theft, unauthorized credit and debit card charges, and applications for unauthorized student loans.
The complaint alleges a series of missteps by the company before, during, and after the breach, including: (i) not applying a recommended security patch; (ii) failing to recognize the breach for over three months; (iii) not warning consumers for another month after discovering the breach, thus preventing timely credit freezes or other protection methods; (iv) sending confusing emails and notices to consumers about whose data was compromised and how to protect themselves after the breach; and (v) creating confusion as to whether an arbitration clause included in the terms of service for the company’s credit monitoring website would apply to consumers using the service.
The plaintiffs seek, among other things, class certification; permanent injunctive relief; disgorgement and restitutions of earnings; compensatory, consequential, general, statutory, and punitive damages; declaratory relief; and attorneys’ fees.
CFPB Publishes Two RFIs Concerning Free Access to Credit Scores
On November 13, the CFPB’s Office of Financial Education (OFE) published two requests for information (RFI) in the Federal Register concerning free access to credit scores. The first RFI requests information related to (i) consumers’ experience when accessing free credit scores, and (ii) the experience of companies and nonprofits when offering free access to credit scores to their customers and the general public. The Bureau plans to use the information gathered through the RFI to, among other things, “identify educational content that is providing the most value to consumers, and additional educational content that the Bureau or others could develop to increase consumers’ understanding of credit scores and credit reports.” Comments must be received by February 12, 2018.
The second RFI requests information on companies that provide existing customers free access to a credit score. This information will be used to update OFE’s March 2017 list of companies that offer this service. (See previous InfoBytes coverage here.) Following its update to the list, the CFPB intends to publish information “to educate consumers about the availability of credit scores and credit reports and how this information can be used effectively.” Comments must be received by January 12, 2018.
DOJ Sues Washington State Company for Alleged SCRA Violations
On November 9, the DOJ filed a complaint in the Western District of Washington against a Washington company for allegedly foreclosing on servicemembers’ homes in violation of the Servicemembers Civil Relief Act (SCRA). According to the DOJ’s complaint, its investigation uncovered at least 28 unlawful non-judicial foreclosures. In addition to a declaration that the company violated the SCRA, the DOJ is seeking monetary damages, a civil penalty, and injunctive relief.
The allegations stem from an investigation the DOJ initiated into the company’s foreclosure practices following the same court’s dismissal of a private SCRA action brought by a veteran on the ground that it was time-barred. Prior to the DOJ initiating the investigation, the veteran appealed the dismissal to the Ninth Circuit Court of Appeals. The DOJ filed an amicus brief in that appeal, arguing that private SCRA suits are governed by the four-year federal catch-all statute of limitations.