The CFPB released its Summer 2024 Supervisory Highlights, which focused on the servicing and collection of consumer debt. The report shared key findings from recent supervisory examinations of auto and student loan servicing companies and debt collectors. In addition, the report highlighted issues with deposit and prepaid accounts, with a focus on medical credit card practices. Significant findings include the following:
- Auto loan servicing. The CFPB found that auto loan servicers engaged in unfair acts or practices by failing to auto-debit consumers’ final payments via their autopay system without providing adequate notification to borrowers enrolled in autopay that they needed to make those final payment manually. Servicers are advised to revise policies to ensure final payments are debited via autopay or that consumers are clearly informed about the need for manual payment for their last bill.
- Student loan servicing. Examiners found that servicers engaged in unfair and abusive acts or practices by subjecting consumers to excessive wait times when contacting them by phone (e.g., average hold times exceeding 40 minutes). They also found unfair and abusive acts or practices by failing to provide an adequate avenue for consumers to timely resolve their disputes by phone or submit phone payments. Examiners also cited servicers for engaging in deceptive acts or practices by providing inaccurate information regarding which forms consumers should submit in order to qualify for certain loan programs such as forbearance. Finally, Bureau examiners cited a servicer for a Regulation E violation for failing to notify consumers 10 days before an electronic funds transfers that were larger than prior transfers under the same pre-authorization. The guidance urges servicers to update their transaction notification processes, enhance call center staffing, and improve staff training to support a more transparent and reliable communication process with borrowers.
- Debt Collection. The CFPB highlighted debt collection compliance issues, including, among other things, failures to provide debt validation notices, misrepresentation of business identities, and improper communication methods like ignoring consumer requests to cease contact. Examiners uncovered instances of collectors using aggressive or verbally abusive language, including for consumers unable to pay due to a recent hospitalization, and with debt collectors communicating with consumers at times and places known to be inconvenient or unusual. To read more click here.