CFPB Alleges Collectors Fail to Timely Refund Overpayments
- Written by Steel Rose
The Supervisory Highlights detail issues identified by CFPB examination teams across a wide number of segments of the consumer financial services industry. Summarized below are those issues identified in the areas of auto servicing, consumer reporting, credit card account management, debt collection, deposits, mortgage origination, prepaid accounts, remittances, and student loan servicing. Specifically, collectors were cited for refunds of overpayments and identity theft:
The CFPB alleges debt collectors fail to refund overpayments in a timely manner. Per the report, these practices caused or were likely to cause substantial injury to affected borrowers as consumers lost the ability to use funds for an extended period of time. Covered collection agencies where this practice was discovered will have to report on remedial measures, including issuing full refunds to consumers, revising their policies and procedures, and strengthening their monitoring to ensure credit balances are timely refunded.
The CFPB believes that debt collectors misrepresent consumers’ responsibilities in cases of identity theft. The CFPB reports that examiners found instances in which debt collectors violated this section by misrepresenting or implying to consumers that they were responsible for paying charges on their accounts that were incurred as the result of fraudulent activity. The CFPB might also see this as a sustained deviation from debt collectors’ policies and procedures.