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Pay-by-phone fees continue to attract the Consumer Financial Protection Bureau’s attention. Compliance Bulletin 2017-01, issued on July 27, 2017, indicates that the following acts or practices may constitute unfair, deceptive, or abusive acts or practices (“UDAAP”) or contribute to the risk of committing UDAAPs:

  1. Failing to disclose the prices of all available phone pay fees when different payment options carry materially different fees;
  2. Misrepresenting the available options or that a fee is required to pay by phone;
  3. Failing to disclose that a phone pay fee would be added to a consumer’s payment, which could create the misimpression that there is no service fee; and
  4. Lack of employee monitoring or service provider oversight, which may lead to misrepresentations or failure to disclose available options and fees.

The Bureau has previously raised concerns about phone pay fees. In a 2014 enforcement action, the Bureau and the Federal Trade Commission alleged that a mortgage servicer engaged in deceptive acts or practices by misrepresenting that the only payment method consumers could use to make timely payments was a particular method that required a convenience fee. In 2015, the Bureau took action against a bank for allegedly misrepresenting that a phone pay fee was a processing fee rather than a fee to enable the payment to post on the same day. The bank also allegedly failed to disclose other no-cost payment options. This week’s Bulletin 2017-01 suggests that companies should disclose such fees in writing to consumers, as opposed to relying solely on phone representatives to  explain the fees to consumers.

Bulletin 2017-01 also reiterates that certain practices in connection with phone pay fees may conflict with the Fair Debt Collection Practices Act (“FDCPA”). For example, Bureau examiners have found alleged violations of the FDCPA where the underlying consumer debt contract did not expressly permit the charging of phone pay fees and where the applicable state law was silent on the fees’ permissibility. The Bureau indicated last year that it may propose rules under the FDCPA to clarify that debt collectors may charge convenience fees only where state law expressly permits them or the consumer expressly agreed to them in the contract that created the underlying debt.

The Bulletin recommends that companies review their phone pay fee practices, including reviewing applicable state and federal laws, underlying debt contracts, service provider procedures, other consumer-facing materials, consumer complaints, and employee incentive plans for potential risks.

In March 2017, the CFPB issued a special edition of its Supervisory Highlights addressing consumer reporting from the perspective of consumer reporting companies (“CRCs”) (commonly referred to as credit bureaus or consumer reporting agencies) and furnishers. This follows the CFPB’s February 2017 Monthly Complaint Report, which focused on complaints related to credit reporting. These publications, along with recent statements by Director Robert Cordray, suggest that the CFPB will be placing additional supervisory focus on credit reporting for both CRCs and furnishers of consumer information. Continue Reading Time for Some Spring (Credit Reporting) Cleaning

On October 19, a divided Ninth Circuit ruled that a trustee of a deed of trust who takes action to initiate non-judicial foreclosure is not a “debt collector” under the Fair Debt Collection Practices Act (FDCPA). See Ho v. ReconTrust Co., NA, No., 10-56884 (9th Cir. Oct. 19, 2016).  The court reasoned that because the object of a non-judicial foreclosure is to retake and resell the property that secures a debt, as opposed to collecting money from the borrower, the trustee was not acting as a “debt collector” under the statute.  In further support of its conclusion, the court reasoned that holding otherwise would create a conflict between the trustee’s duties under state law and its obligations under the FDCPA.

In reaching this conclusion, the majority expressly rejected the position put forth by the Consumer Financial Protection Bureau (CFPB), Continue Reading Ninth Circuit Rejects CFPB Amicus Position as Unpersuasive

Nearly three years after releasing its Advance Notice of Proposed Rulemaking on debt collection practices, the Consumer Financial Protection Bureau (CFPB) has finally offered some insight on its plans for issuing rules under the Fair Debt Collection Practices Act. On July 28, 2016, the CFPB released an outline of proposals that it is considering in preparation for the next step in the rulemaking process—convening a Small Business Review Panel. Read more about the proposals under consideration, particularly in light of past CFPB enforcement actions and guidance, in Mayer Brown’s Legal Update, available here.

 

*Mrs. Moyer is not admitted in the District of Columbia. She is practicing under the supervision of firm principals.

On June 29, 2016, the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) jointly filed a complaint against a regional bank alleging that the bank discriminated against African-American borrowers in many aspects of its mortgage lending services. The agencies alleged that the bank’s discriminatory practices violated both the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act. Below we outline the primary allegations in the complaint, the main terms of the consent order, and the key takeaways from this recent action. This is the CFPB’s first use of mystery shoppers to identify discrimination in a fair lending enforcement action and may offer a sign of what’s to come. Continue Reading Mystery Shopping Revelations: CFPB, DOJ, Bring Action Against Regional Bank for Discriminatory Lending Practices Confirmed by Testers*

It has been a busy June for the Consumer Financial Protection Bureau (CFPB) in the auto lending space. On June 9, the CFPB released a “Know Before You Owe” shopping sheet for auto loans. On June 27, the CFPB published a report entitled “Consumer Voices on Automobile Financing” (the “Auto Financing Report”). This report contains information on consumers’ challenges in obtaining and understanding auto financing based on focus groups with consumers and narrative consumer complaints. On June 28, the CFPB released its monthly complaint snapshot highlighting consumers’ complaints on auto lending. In the midst of this, the CFPB also published a series of blog posts directed at consumers on how to shop for auto loans.

Although the majority of the CFPB’s documents and articles are focused on consumers, direct and indirect auto lenders can learn from the CFPB’s guidance. Before you drive away for the long weekend, here are some key highlights from the CFPB’s recent slew of auto financing information: Continue Reading Auto Lenders Take Note: Key Takeaways from the CFPB’s Recent Auto Financing Publications

The Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau (“CFPB”), the Federal Deposit Insurance Corporation (“FDIC”), the National Credit Union Administration, and the Office of the Comptroller of the Currency (“OCC”) issued guidance on May 18, 2016 outlining the agencies’ supervisory expectations regarding customer account deposit reconciliation practices. The guidance does not impose any new requirements, but reminds institutions of the expectation that they implement policies and procedures to protect customers where there is a credit discrepancy (e.g., difference between the amount of the actual deposit and the amount credited to the customer’s account). Continue Reading CFPB and Prudential Regulators Issue Guidance on Deposit Reconciliation Practices