The Consumer Financial Protection Bureau yesterday released the latest version of its Supervisory Highlights, which chronicles issues found during examinations conducted by the Bureau between July 2022 and March 2023. The issues are used to help drive the Bureau’s decisions regarding rulemaking and enforcement actions and have been cited as a great opportunity for those regulated by the CFPB to get a glimpse into what the CFPB is seeing and how it is likely to act on those observations. With respect to debt collection, the Bureau cited a couple of issues that merit attention.
A copy of the report can be accessed by clicking here.
First, the Bureau noted that its examiners uncovered situations where collectors were attempting to collect on medical debts that were actually incurred by the individuals at work, even after receiving sufficient information to render the debt uncollectible under that state’s worker’s compensation laws. Collectors were also found to have been informing consumers that if a balance was paid in full by a certain date, any interest assessed on the debt would be reversed, only to fail to credit the accounts with the accrued additional interest.
The CFPB also spotlighted a number of issues with respect to credit reporting, including:
- Not regularly reviewing policies and procedures concerning the accuracy and integrity of furnished information and updating those policies and procedures as necessary. For example, one company failed to review and update their policies after changing software systems related to handling disputes.
- Not conducting reasonable investigations of disputes. Rather than investigate disputes that were sent directly to them at a address provided by the furnishers to the credit reporting agencies and included on consumer credit reports, furnishers “responded to the disputes by instructing the consumers to re-send their direct disputes to certain other addresses of the furnishers and only investigated the disputes to the extent the consumers re-sent them per these instructions.”
- Not informing consumers when disputes are deemed to be frivolous or irrelevant the reasons for the determination and failing to identify information that would be required to conduct an investigation.
- Failing to provide adequate address-disclosures for notices. Per the CFPB: “Examiners are continuing to find that furnishers are not clearly and conspicuously specifying to consumers an address for notices at which a consumer may notify the furnisher that information is inaccurate. In reviews of third-party debt collection furnishers, examiners found that the only notice or dispute address furnishers provided to consumers was an address included on debt validation notices for the purpose of disputing the validity of a debt. Examiners found that the debt validation notices did not specify to consumers an address for, or otherwise specify that the debt validity dispute address may also be used for, notices relating to inaccurately furnished consumer report information. As a result, examiners found that the furnishers have not met the requirement in Section 623(a)(1)(C) of the FCRA to not be subject to Section 623(a)(1)(A) and therefore are subject to the stricter prohibition under Section 623(a)(1)(A) of the FCRA against furnishing information the furnishers know or have reasonable cause to believe is inaccurate.”