CFPB Supervisory Highlights Report Spotlights Issues Found in Debt Collection Exams

The Consumer Financial Protection Bureau issued its latest Supervisory Highlights report yesterday, which offers violations uncovered by the regulator during supervisory exams that were conducted during the second half of 2021. The report spotlighted problem areas, including wrongful auto repossessions and failures to conduct reasonable investigations when consumers dispute debts, but also included violations related to the Fair Debt Collection Practices Act.

A copy of the report can be accessed by clicking here.

Examiners, for example, found collectors that continued to try to collect on debts after the consumers had claimed to be victims of identity theft and that they had police reports and affidavits to substantiate their claims. Such attempts violate the FDCPA’s prohibition against falsely representing the character, amount, or legal status of a debt. After being informed of the violations, the companies in question refunded the payments that were made by the consumers, according to the report.

Collectors were also found to not refund overpayments and credit balances to consumers in a timely manner, constituting an unfair, deceptive, or abusive act or practice. The companies found to have committed these infractions were going to issue full refunds to the affected consumers while also revising their policies and procedures to make sure refunds are handled promptly.

With respect to credit reporting, credit reporting companies were found to have simply deleted “thousands” of disputed tradelines, instead of conducting investigations to resolve disputes made by consumers. The companies were “directed” to stop violating the Fair Credit Reporting Act’s dispute investigation requirements, according to the report.

Credit reporting companies were also found to not be notifying furnishers of disputes in a timely manner and were told to stop violating the FCRA’s timeliness requirements.

Furnishers in different areas of the financial services industry were found to not be conducting reasonable investigations when notified of indirect disputes. While not of the areas specifically mentioned debt collection, the anecdotes included in the report should serve as a cautionary tale and notification of reviewing policies and procedures to make sure that they are not found to be committing similar infractions.

The CFPB releases its Supervisory Highlights report twice a year. Previous reports can be accessed here, here, and here.

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