The Consumer Financial Protection Bureau (CFPB) issued the Fall 2022 edition of its Supervisory Highlights report. This edition covers examination topics the CFPB identified for the period of January through June of 2022.  

In the introduction of the issue, the CFPB explains that they are seeing the same patterns of violations across similar types of institutions, even when those violations have already been publicized in previous issues of supervisory highlights. Further, the CFPB announced the creation of a “Repeat Offender Unit” within the agency. This unit will be focused on reviewing and monitoring the activities of repeat offenders, identifying the cause of repeated violations, and holding repeatedly offending institutions accountable. This appears to be the first public announcement of the unit. The creation of this unit tracks with Director Chopra’s statements this past spring and the Bureaus focus to “rein in repeat offenders.”

Areas of focus that were identified in this issue are:  

Auto Servicing:  

  • Servicers failing to ensure that refunds were given, or unearned fees were returned to consumers who purchased add-on products through loan proceeds but then paid off those loans early or had the vehicles repossessed resulting in consumers paying for products they were no longer able to use.  
  • Servicers misleading consumers about the possibility of loan modification agreements to entice “good faith” payments then denying loan medication requests.  
  • Servicers double billing for collateral protection insurance products.  
  • Servicers inadvertently and improperly activating starter interrupter devices when accounts were not past due.  

Consumer Reporting: 

  • Nationwide Credit Reporting Companies not fulfilling their duty to review and report determinations made and actions taken in response to complaints.  
  • Information furnishers reporting inaccurate information despite them having knowledge of errors in the information and furnishers are not meeting their duty to correct and update furnished information.  

Credit Card Account Management: 

  • Violations of Regulation Z billing error resolution provisions and processes.  
  • Errors in APR Rate revaluations 
  • Misrepresentations in statements relating to marketing, sales, and servicing of add-on products.  

Debt Collection: 

  • Collectors continuing to engage in calls with consumers even after the consumers expressed that that the communication was causing them to feel annoyed, harassed, or abused. Multiple instances of collectors engaging with and disclosing information to third parties about a consumer’s debt when the third party had a name similar to the debtor’s name.  

Deposits: 

  • Examiners identified policies and procedures that introduced “unfairness risk” and may have resulted in: (i) the use of protected unemployment insurance funds or economic impact payments to set off negative balances in the accounts in which they were deposited, (ii) garnishment of protected economic relief payments protected under the Appropriations Act of 2021, or (iii) garnishment of protect payments or unemployment insurance funds protected under applicable state law.  

Mortgage Origination: 

  • Improper reduction of loan originator compensation to cover settlement costs that were foreseeable. 
  • Deceptive language of waiver of class action rights in loan security agreements.  

Mortgage Servicing:  

  • Charging sizable fees for phone payments when consumers were unaware of the fees.  
  • Charging of illegal fees during CARES Act forbearances. 
  • Failures in processing CARES Act Forbearance requests.
  • Failing to evaluate consumers for all loss mitigation options and failing to provide accurate information about such options.  

Payday Lending: 

  • Failure to maintain records of call recordings necessary to demonstrate full compliance with conduct provisions of consent orders.  

To see a copy of the issue please click this link.