Earlier this week, the Consumer Financial Protection Bureau released the Fall 2021 edition of its Supervisory Highlights (“Supervisory Highlights” or “Report”). This marks the first edition issued under Director Rohit Chopra, President Biden’s pick to head the agency. The press release accompanying this edition of Supervisory Highlights cites “wide-ranging violations of law” and asserts that “irresponsible or mismanaged firms harmed Americans during the COVID-19 pandemic,” statements that signal that the Chopra-led Bureau is taking an aggressive approach to supervision and is scrutinizing supervised entities closely.

Supervisory Observations

This edition of Supervisory Highlights covers examinations completed between January 2021 and June 2021 and identifies violations in eight areas: credit card account management, debt collection, deposits, fair lending, mortgage servicing, payday lending, prepaid accounts, and remittance transfers. As is the Bureau’s common practice, the Report refers to institutions in the plural even if the related findings pertain to only a single institution.

  • Credit Card Account Management. The Report details several findings related to credit cards, including violations of Regulation Z and the prohibition against unfair, deceptive, and abusive acts and practices (“UDAAPs”). With respect to Regulation Z, Bureau examiners determined that creditors failed to comply with requirements related to billing errors. Specifically, the Bureau details alleged failures concerning the timing of resolving notices of billing errors (within two complete billing cycles), reimbursing late fees when payment had not been credited to an account, and conducting reasonable investigations based on consumer allegations of missing payments and unauthorized transactions. The Report indicates that creditors are working to identify and remediate affected customers and develop training on Regulation Z’s billing error resolution requirements for employees.

The Bureau also alleged deceptive practices relating to the marketing of credit card bonus offers in two separate instances. First, examiners determined that credit card issuers engaged in deceptive acts by failing to provide advertised bonuses to existing customers who satisfied the bonus program requirements of opening a new account and meeting the spending requirements. Moreover, the Bureau noted that issuers failed to ensure employees followed procedures to enroll existing consumers correctly. Second, the examiners determined that issuers also engaged in deceptive acts when their advertising to consumers failed to disclose or adequately disclose material information about qualifying for the bonus. In this situation, the bonus was tied to applying for the card online, so consumers who otherwise satisfied advertised requirements, but applied through a different channel, did not receive the bonus. In response to these findings, issuers are modifying applicable advertisements and undertaking remedial and corrective actions.

  • Debt Collection. According to the Report, examiners found that larger participant debt collectors were at risk of violating the Fair Debt Collection Practices Act (“FDCPA”) as it relates to using false representations or deceptive means to collect a debt. The Report explained that debt collectors, in the context of discussing the consumer restarting a payment plan, represented that making the final payment of the plan would improve the consumer’s creditworthiness. The Bureau, however, indicated that this could lead the least sophisticated consumer to assume that deleting derogatory information would result in improved creditworthiness, when in fact numerous factors influence a consumer’s creditworthiness and making a final payment may not necessarily improve a person’s credit score. As a result of the findings, the debt collectors revised their FDCPA policies and procedures and enhanced their training and monitoring systems.


Continue Reading First CFPB Supervisory Highlights Issued Under Director Chopra Cites “Wide-Ranging Violations of Law”

Recent developments indicate that credit reporting concerns are likely to be at the forefront of the CFPB’s agenda in the coming months. Last month, CFPB Director Rohit Chopra spoke before the House Committee on Financial Services and discussed several key topics, including credit reporting issues. Earlier this month, the CFPB published a report called “Disputes on Consumer Credit Reports” that discusses trends in consumer credit disputes and how such disputes are resolved. Shortly after the CFPB published its report, a group of Democratic senators sent a letter to Director Chopra, urging the CFPB to address credit reporting issues within the industry. This blog post highlights some of the key points in Director Chopra’s testimony, the CFPB report, and Senate Democrats’ letter to Director Chopra.

Continue Reading Credit Reporting in the Crosshairs?

Statistics obtained through a FOIA request confirm what everyone expected – an uptick in CFPB enforcement activity that coincides with the beginning of the Biden Administration. Last year, we reported on statistics showing the number of new enforcement investigations opened every fiscal year through FY2019. Those statistics showed that new enforcement investigations had dropped significantly

On August 10, 2021, the CFPB’s Office of Supervision Policy published a report titled Mortgage Servicing COVID-19 Pandemic Response Metrics: Observations from Data Reported by Sixteen Servicers (“Servicing Metrics Report”).  Although the Servicing Metrics Report doesn’t allege any compliance deficiencies in the servicers’ performance, the topics addressed in the report and the CFPB’s accompanying press release indicate areas of focus for the CFPB, and servicers should take note.

Continue Reading CFPB Report on Servicers’ COVID-19 Response Signals Enforcement Priorities

As many of us look forward to our summer vacations, the NMLS also has plans to take time off this summer.  Due to system maintenance, beginning Wednesday, July 21 at 8:00 p.m. ET, the NMLS and NMLS Consumer Access will be unavailable for four full days, July 22 through July 25, with an anticipated return to operations on Monday July 26 at 7:00 a.m. ET.  This maintenance period is significantly longer than previous maintenance periods, which typically occur over a weekend.  The system will be completely inaccessible during this time, meaning that all Company and Individual users will be unable to log into their record to make any filings or amendments to the record, or to review any status updates or licensing deficiencies. Regulators also will be unable to access the NMLS or NMLS Consumer Access during this maintenance period.  The NMLS Call Center will remain open during the system maintenance.

Below, we offer a few suggestions for users to ensure you and/or your Company are ready for the upcoming NMLS maintenance period:


Continue Reading NMLS and NMLS Consumer Access Scheduled to Take a Summer Break

A mortgage loan product is a bundle of loan terms. That is what the Consumer Financial Protection Bureau (CFPB) reminds us in its latest Supervisory Highlights.

The CFPB first used that phrase back in 2013, but you may have missed it. It appeared in the fine print of footnote 82 in the CFPB’s lengthy

Should US state nonbank mortgage servicers be subject to “safety and soundness” standards of the type imposed by federal law on insured depository institutions, even though the nonbanks do not solicit and hold customer funds in federally insured deposit accounts or pose a direct risk of a government bailout? Well, state mortgage banking regulators think

We recently received a response to several FOIA requests we had made  to the Consumer Financial Protection Bureau (CFPB or Bureau) regarding various enforcement statistics and processes. Because the CFPB does not make these materials generally available to the public, we share them here. The materials include the Enforcement Policy and Procedures Manual and Consent Order template, and data regarding the number enforcement investigations, opened, closed and pending each fiscal year, and the number of matters referred from supervision to enforcement. 
Continue Reading CFPB: Enforcement Manual and Stats

News broke last week of a major reorganization at the Consumer Financial Protection Bureau (CFPB or Bureau), with headlines focusing on how the shakeup will hamper investigations and limit the Office of Enforcement’s autonomy. To better understand what happened, it’s helpful to have a little bit of perspective on the CFPB’s authorities and organization. While it’s too soon to know how the reorganization will impact the agency’s enforcement docket, it is not at all clear that it will have the limiting impact that some expect.

The CFPB was created as a somewhat unique regulator, combining the traditional tools of prudential regulators like the Federal Reserve or Office of the Comptroller of the Currency (supervision and examination) and those of law enforcement agencies like the Federal Trade Commission (investigation and litigation). While the prudential regulators also have enforcement authority, that authority is generally limited to entities over which the agency has supervisory authority (and related individuals and service providers). And that enforcement authority is exercised only after an examination by supervisory personnel; that is, it is the culmination of the supervisory process, not an independent process. By contrast, the CFPB’s enforcement jurisdiction is much broader than the defined set of covered persons over whom it has supervisory jurisdiction, extending to any company or individual that is subject to one of eighteen different statutes or who offers or provides a consumer financial product or service. While some CFPB enforcement actions arise out of examinations, the vast majority to date have been outgrowths of organic enforcement investigations that were not tied to examinations.

At bottom, these two tools—supervision and enforcement—are just different legal authorities by which the agency can gather information from institutions subject to its jurisdiction to determine if legal violations occurred. For a brand new agency, that raises a difficult question – which of these tools do you use in any given circumstance to determine if a particular institution is violating the law? Do you send in examiners or enforcement attorneys?

That question wasn’t answered immediately at the agency’s creation. Instead, the offices of Supervision and Enforcement each focused on hiring staff and building out processes for the exercise of their respective functions.
Continue Reading Unpacking the Enforcement Shakeup at the CFPB – A (Former) Insider’s View

On September 25, California Governor Newsom signed Senate Bill 908, enacting the Debt Collection Licensing Act (the “DCLA”), placing California with the majority of states that require consumer debt collectors to be licensed. Subject to a few exemptions, persons engaging in the business of debt collection in California (including debt buyers) will be required to submit a license application before January 1, 2022. Senate Bill 908 is just one of a number of consumer protection bills enacted in California in recent days, including a bill creating the state’s “mini-CFPB.”

Continue Reading California Becomes the Latest State to License Debt Collectors