All in UDAAP

CFPB Focuses on Unfair Discrimination

Adam Witmer
Regulatory Update, UDAAP

On March 16, 2022, the CFPB announced changes to its supervisory operations to better protect families and communities from illegal discrimination, including in situations where fair lending laws may not apply. According to the CFPB, the Bureau will closely examine discriminatory practices that violates the rules against unfair practices. Specifically, the CFPB will focus on financial institutions’ decision-making in advertising, pricing, and other areas to ensure that companies are appropriately testing for and eliminating illegal discrimination.

CFPB Moves to Mitigate Illegal Automobile Repossessions

Adam Witmer
Regulatory Update, UDAAP

On February 28, 2022, the CFPB issued a compliance bulletin regarding repossession of vehicles, and the potential for violations of the Dodd-Frank Act’s prohibition on engaging in unfair, deceptive, or abusive acts or practices when repossessing vehicles. This is after the CFPB observed, during its examinations and enforcement actions, illegal seizure of cars, sloppy record keeping, unreliable balance statements, and ransom for personal property.

CFPB Fines Reverse Mortgage Lender for Deceptive Advertising

Adam Witmer
Regulatory Update, UDAAP, Regulation Z

On 4/27/21, the Consumer Financial Protection bureau (CFPB) announced that it had taken action against Nationwide Equities Corporation for sending deceptive loan advertisements to hundreds of thousands of older borrowers. In their release, the Bureau explained that it had found that advertisements from Nationwide Equities misled consumers about how much money they could receive from a reverse mortgage, the fees and costs associated with the products, and the consequences of nonpayment. In addition, the advertisements violated the Mortgage Acts and Practices Advertising Rule (MAP Rule), the Truth in Lending Act (TILA), and the Consumer Financial Protection Act of 2010 (CFPA). The CFPB is ordering the company to pay a penalty, cease its illegal conduct, and implement a compliance plan to affirmatively review every advertisement to ensure they do not violate federal law.

CFPB Rescinds Abusiveness Policy Statement from 2020

Adam Witmer
UDAAP, Regulatory Update

On 3/11/21, the CFPB announced that it is rescinding a policy statement that was just over a year old. Specifically, the CFPB has rescinded its January 24, 2020 policy statement titled “Statement of Policy Regarding Prohibition on Abusive Acts or Practices.” In their release, the CFPB explains that they intend to exercise its supervisory and enforcement authority consistent with the full scope of its statutory authority under the Dodd-Frank Act and these changes help to better protect consumers and the marketplace from abusive acts or practices.

CFPB Issues Consent Order Against Nissan for Debt Collection Practices

Adam Witmer
Regulatory Update, UDAAP

On 10/13/2020, the CFPB issued a consent order against Nissan Motor Acceptance Corporation for a number of issues relating to debt collection and repossession practices. In their release, the CFPB found that Nissan:

  • wrongfully repossessed vehicles;

  • kept personal property in consumers’ repossessed vehicles until consumers paid a storage fee;

  • deprived consumers paying by phone of the ability to select payment options with significantly lower fees; and,

  • in its loan extension agreements, made a deceptive statement that appeared to limit consumers’ bankruptcy protections.

In their release, the CFPB asserts that these practices resulted in UDAAP violations and the consent order requires Nissan to provide up to $1 million of cash redress to affected consumers, credit any outstanding account charges associated with wrongful reposession, and to pay a CMP of $4 million.

TD Bank Fined for Overdraft and FCRA Violations

Adam Witmer
FCRA, Regulatory Update, UDAAP

On 8/20/2020, the CFPB announced a settlement with TD Bank regarding its marketing and sale of its optional overdraft service, referred to by the as Debit Card Advance (DCA). In addition to the issues with their overdraft practices, the CFPB also found that “TD Bank violated FCRA and Regulation V by failing to establish and implement reasonable written policies and procedures concerning the accuracy and integrity of consumer-account information it furnished to two nationwide specialty consumer reporting agencies.” The consent order requires TD Bank to provide an estimated $97 million in restitution to about 1.42 million consumers and to pay a civil money penalty of $25 million.

CFPB Settles with Mortgage Companies Regarding UDAAP

Adam Witmer
Regulatory Update, UDAAP

On 7/24/2020, the CFPB issued consent orders against two California-based mortgage lenders: Sovereign Lending Group, Inc. (Sovereign) and Prime Choice Funding, Inc. (Prime Choice). According to the CFPB, both companies had violated UDAAP by mailing consumers advertisements for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or lacked required disclosures. The consent orders require the companies to pay civil money penalties and impose requirements to prevent future violations.

CFPB Sues for UDAAP Violations

Adam Witmer
Regulatory Update, UDAAP

On 7/6/2020, the CFPB announced the filing of a lawsuit against My Loan Doctor LLC and its founder, Edgar Radjabli. In their release, the CFPB alleges that “Loan Doctor and Radjabli made several false, misleading, and inaccurate marketing representations in advertising Loan Doctor’s “Healthcare Finance (HCF) Savings CD Account,” in violation of the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts or practices. As the Bureau’s complaint alleges, starting in August 2019, Loan Doctor took more than $15 million from at least 400 consumers who opened and deposited money into Loan Doctor’s deceptively advertised product.”

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