There’s Guidance in CFPB’s Supervisory Highlights Report

The Consumer Financial Protection Bureau’s May 22 Supervisory Highlights report offers a rare glimpse into the CFPB’s thoughts on its first two years of supervision of nonbank entities, particularly debt buyers and debt collectors. Although the report contains several of the bureau’s standard talking points (data integrity in debts sales, for example) it does reveal new issues that have drawn the regulator’s attention and new guidance on pre-existing areas of concern.files.consumerfinance.gov_f_201405_cfpb_supervisory-highlights-spring-2014_Page_01

Compliance Management Systems

It’s hard to believe, but according to the bureau some credit reporting agencies had no compliance management systems in place. Where it found a CMS, there were several instances uncovered where neither the agency’s board of directors nor senior management had adequate oversight of the compliance process. Other problems uncovered were in the development and documentation of policies and communicating changes throughout the organization. Other deficiencies included creditors having inadequate procedures for assessing their debt buyers.

Electronic Funds Transfer Act

The report identified a lack of compliance with the rules governing pre-authorized transfers under the Electronic Funds Transfer Act, noting deficiencies in both the creation of pre-authorized transfers and their execution.

Debt Collection

The bureau reported one instance where a debt collector made 17,000 telephone calls “outside the appropriate calling hours set forth in the FDCPA.” The same entity was reported to have called “some consumers” more than 20 times over two days. Dismissing lawsuits where a consumer filed an answer also drew scrutiny from the bureau. This entity would cause the dismissal in 70 percent of its contested cases, “because it was unable to locate documentation to support its claims.” The report also cited improper third-party contacts and having made telephone calls following do-not-call requests, among other things.

Credit Reporting

The bureau criticized the practice of deleting tradelines in response to credit reporting disputes. By deleting the tradeline, instead of investigating the dispute, a supervised entity ignores “a critical check on the accuracy of furnished items [that] can identify systematic problems with furnishers’ data,” the bureau concluded.

June 5 Webinar – Understanding The CFPB’s Supervisory Highlights Report

The CFPB’s report presents an opportunity to look closer at your procedures and fix them before your organization appears in the next Highlights report. So on June 5, we will take you through the report’s finer details. We’ll have an in-depth discussion of the topics outlined here, but we’re also going to reveal some others and why your procedures may now need adjustment. There’s plenty to learn from the report for creditors, debt buyers, collection agencies and collection attorneys. Topics include:

  • Leadership involvement in the CMS – why is the CFPB pushing it and what are the risks to leadership if they are not engaged?
  • Do you have a weak service provider assessment process?
  • Addressing the CFPB’s “hot button” debt collection practices
  • Credit Reporting – is deleting no longer an adequate response to a dispute?
  • EFTA troubles — find the problems and fix them fast

The program is 1.5 hours and is accredited for 1.5 hours of DBA International Continuing Education.  Application is pending for 1.5 hours of attorney CLE for California, Delaware, New Jersey, Pennsylvania* and Virginia. New York attorneys have reciprocity with Virginia CLE. *PA attorneys must attend the presentation in our NJ office to receive credit.

Cost: $105.00
Time: 2:00 p.m. Eastern / 11:00 a.m. Pacific
Date: June 5, 2014

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Donald Maurice provides counsel to the financial services industry, successfully litigating matters in the state and federal courts in individual and class actions. He has successfully argued before the Third, Fourth and Eighth Circuit U.S. Courts of Appeals, and has represented the financial services industry before several courts including as counsel for amicus curiae before the United States Supreme Court. He counsels clients in regulatory actions before the CFPB, and other federal and state regulators and in the development and testing of debt collection compliance systems. Don is peer-rated AV by Martindale-Hubbell, the worldwide guide to lawyers. In addition to being a frequent speaker and author on consumer financial services law, he serves as legal counsel to DBA International and as chair of the ABA's Bankruptcy and Debt Collection Subcommittee. He serves on the governing Board of Regents of the American College of Consumer Financial Services Lawyers and on the Governing Committee of the Conference on Consumer Finance Law .