Welcome to the Compliance Cohort. We are a group of compliance professionals working to make compliance easier. Our goal is to take complex compliance concepts and put them in simple terms that apply to the real world. We are glad you have found us and look forward to collaborating in the future.
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All in UDAAP
In this Halloween special Compliance Clip (video), Adam discusses a spooky topic: raising an account from the dead. Well, it’s not really creepy in the Halloween sense, but reopening a closed deposit account is a risky practice, and Adam discusses why, citing a recent enforcement action.
On September 13, 2024, the CFPB sued Horizon Card Services and its CEO Robert Kane for tricking consumers into signing up for its expensive membership credit card. The CFPB alleges Horizon and Kane attracted consumers to the membership program through deceptive marketing tactics.
On September 11, 2024, the CFPB ordered TD Bank to pay a total of $28 million for repeatedly sharing inaccurate and negative information about its customers to consumer reporting companies. According to the CFPB, the information included systemic errors about credit card delinquencies and bankruptcies.
On July 19, 2024, the Federal Reserve Board took action to address consumer compliance breakdowns by Green Dot, fining the firm $44 million for numerous unfair and deceptive practices and a deficient consumer compliance risk management program. According to the Federal Reserve Board’s press release, Green Dot violated consumer law in its marketing, selling, and servicing of prepaid debit card products, and its offering of tax return preparation payment services.
On June 4, 2024, the CFPB issued a circular warning against the use of unlawful or unenforceable terms and conditions in contracts for consumer financial products or services. The CFPB warns they will take action against companies and individuals that deceptively slip coercive contract clauses that censor and restrict individual freedoms and rights into their fine print.
On April 24, 2024, the CFPB issued its Supervisory Highlights Spring 2024 edition which covered select examinations regarding mortgage servicing that were completed from April 1, 2023 through December 31, 2023. Examiners found that mortgage servicers engaged in UDAAPs and regulatory violations while processing payments by overcharging certain fees, failing to adequately describe fees in periodic statements, and not making timely escrow account disbursements.
In this Compliance Clip (video), Adam discusses how financial institutions can avoid a potential unfair act or practice when it comes to assessing statement fees and returned statement fees. Adam explains how this practice can result to a risk of UDAAP violation and shares some steps on how to make sure your financial institution is doing it right. A transcript of this video is now available.
On November 20, 2023, the CFPB ordered Toyota Motor Credit Corporation to pay $60 million in consumer redress and penalties for operating an illegal scheme to prevent borrowers from cancelling product bundles that increased their monthly car loan payments. The CFPB alleges that the company withheld refunds or refunded incorrect amounts on the bundled products and knowingly tarnished consumers’ credit reports with false information.
On November 15, 2023, the CFPB ordered online lender Enova International Inc. to pay a $15 million penalty for widespread illegal conduct including withdrawing funds from customers’ bank accounts without their permission, making deceptive statements about loans, and cancelling loan extensions. In 2019, Enova paid a $3.2 million penalty to the CFPB and was ordered to cease its illegal conduct.
