On October 28, the Consumer Financial Protection Bureau issued the latest edition of its “Supervisory Highlights” report, covering illegalities it discovered in the debt collection, student loan servicing, and mortgage collection markets between March and June 2014. Although the Bureau acknowledged increased efforts by covered entities to ensure regulatory compliance, the report nevertheless disclosed serial violations of federal laws like the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq., and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), 12 U.S.C. §§ 5301 et seq.
The CFPB oversees depository institutions and credit unions that have total assets of more than $10 billion. The Bureau also supervises non-banks like mortgage companies, private student loan lenders, payday lenders, and other entities defined through rulemaking as “larger participants.” To date, the Bureau has identified “larger participants” in the following four markets: consumer reporting, consumer debt collection, student loan servicing, and – effective December 2014 – international money transfers.
In its latest supervisory report, the CFPB cited the following FDCPA violations among debt collectors between March and June 2014:
- unlawful imposition of convenience fees;
- false threats of litigation;
- prohibited disclosures to third parties; and
- various unfair practices with respect to debt sales, such as overstating the annual percentage rates in account documents and unjustified delays in forwarding post-sale consumer payments to debt buyers.
In the student loan servicing market, the Bureau found that servicers were violating Dodd-Frank in various ways, including:
- allocating consumer payments to maximize late fees;
- misrepresenting minimum payment requirements;
- charging illegal late fees;
- failing to provide accurate tax information;
- misleading consumers about bankruptcy protections; and
- making illegal debt collection calls at inconvenient times.
Finally, the Bureau’s report observed that mortgage servicers:
- failed to oversee service providers;
- unfairly delayed permanent loan modifications; and
- deceived customers about the status of permanent loan modifications.
In releasing the report, the CFPB emphasized that the cited violations mostly reflected a minority of supervised entities and that they should not be considered generally representative. Rather, the Bureau issues these reports with the purpose of advising industry participants how to best comply with federal law.