CFPB Statement Highlights ‘Illegal Automobile Repossessions’ and Failure to Conduct Reasonable Investigations of Disputed Debts | Bradley Arant Boult Cummings LLP

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The Consumer Financial Protection Bureau (CFPB) issued a press release on May 2, 2022, announcing the release of its surveillance highlights outlining identified consumer protection violations during the second half of 2021. In particular, the CFPB highlighted two areas of concern in its press release: auto repairers and credit reporting companies.

As for car repairers, the CFPB has identified issues related to repossessions and the impact on the consumer. The CFPB focused on consumer loss of personal property left in a repossessed vehicle and consumer difficulty in returning personal property. Additionally, the CFPB has recognized the implications that a sudden loss of transportation can have on a person and their ability to keep their job. The CFPB also alleged that some auto repairers failed to reimburse consumers for add-ons, such as GAP insurance, to the vehicle after repossession and misled consumers about their final loan payments, particularly after payment deferrals following COVID-19.

The CFPB also claimed that credit reporting companies were not meeting their obligations to investigate disputed debts, as required by the Fair Credit Reporting Act (FCRA). Under the FCRA, credit reporting companies must investigate disputed consumer debts in a timely manner. Part of this investigation includes reviewing and reviewing evidence on file with the reporting company and evidence submitted by consumers.

The press release highlights medical debt on consumer credit reports as an example of an apparent failure to investigate. The CFPB explained that adding an unverified medical debt to a consumer’s credit report forces the consumer to pay the amount shown when the medical debt amount may be inaccurate. The CFPB has advised credit reporting companies and providers of their duty to ensure medical bills are accurate before reporting the debt. If credit reporting companies and medical debt providers cannot guarantee it, “CFPB expects credit reporting companies to limit [the furnishers] access” to consumer credit reports.

In addition to the subjects highlighted in the CFPB press release and mentioned above, the Oversight Highlights for the second half of 2021 discussed, among others, the following consumer protection violations:

Automotive repairers

  • Repossession of vehicles after consumers take action to prevent repossession.

Credit reporting companies

  • Failure to timely notify credit information providers of a credit dispute
  • Failure to provide timely written notice to consumers with the conclusion of their credit dispute investigation
  • Failing to investigate consumer disputes and instead deemed disputes frivolous, sent incorrect results of disputes to consumer reporting companies
  • Automobile suppliers miscalculated consumer payment histories during dispute investigations and provided incorrect payment histories to credit reporting companies.
  • Suppliers failed to update and correct consumer information to consumer intelligence companies once on notice

Collection agents

  • Continuing to pursue debts against consumers after being told that the debt resulted from identity theft
  • Misrepresent to consumers that they were legally obligated to pay debts created by the fraud of another
  • Failing to timely refund overpayments of credit balances to consumers.

Take away food

The CFPB continues to emphasize its commitment to strengthening enforcement of consumer protection violations. CFPB’s oversight highlights illustrate its mission to broaden its reach to examine banks and other non-bank financial services companies. Companies with a connection to the financial services industry are advised to institute policies and procedures to ensure compliance with the CFPB’s extensive reading of UDAAP and Fair Lending. In addition, information providers to credit reporting companies are required to provide accurate credit information. The CFPB has granted credit reporting companies the right to limit the access of medical bill providers to consumer credit reports that do not provide accurate information. Given the user-friendly nature of the CFPB, Director Rohit Chopra could announce his approval to expand the list of providers with limited access to consumer credit reports.

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