St.
Paul, Minn., — IC System is excited to announce the promotion of Mike
Selbitschka to Executive Vice President of Sales. In his new role, Mike will
leverage his extensive expertise in the collections industry to drive sales,
enhance marketing strategies, and lead client acquisition efforts at IC System. 

Mike’s
journey with IC System began in 2001 when he started as a Collector. Over the
years, he has held various leadership positions, most recently serving as Vice
President of Operations at the company’s headquarters in St. Paul, MN. His deep
understanding of IC System’s operations, combined with his hands-on experience,
makes him exceptionally well-suited to guide the company’s growth and
innovation in the sales arena.

John
Erickson, Jr., President & CEO of IC System, commented on the promotion,
saying, “Mike’s comprehensive knowledge of our industry and his unwavering
commitment to excellence have made him an invaluable asset to our company. His
leadership and industry insights will undoubtedly propel IC System’s growth
strategies forward.”

Throughout
his tenure, Mike has played a pivotal role in developing key client accounts,
ensuring maximum return on investment through data-driven strategies. His
collaborative approach, encouraging stakeholders to voice their ideas and
concerns, has strengthened IC System’s relationships with its clients and
enhanced the company’s reputation for delivering exceptional results. [article_ad]

Mike’s
promotion is a testament to his hard work, dedication, and the significant
impact he has had on IC System over the past two decades. The entire team at IC
System looks forward to the continued success and innovation he will bring to
his new role as Executive Vice President of Sales. 

About
IC System

IC
System is one of the largest receivables management companies in the United
States. Celebrating its 82nd year in business, IC System is a family-owned,
privately held accounts receivable management firm in its third generation of
family ownership. IC System provides customized, tailor-made debt recovery
solutions for healthcare, dental, small business, government, utilities, and
telecommunications industries on a nationwide scale. Follow IC System on
Twitter at @icsystem or on Linkedin.

MINNETONKA, Minn. — Central
Portfolio Control, a professional collection agency located near the Twin
Cities of Minnesota, recently took a team outing to support Time on the Water, a charity event
to thank Military, first responders, and health care professionals for their
sacrifices. Time on the Water provides an all-expenses-paid five-day fishing
trip to Lake of the Woods near Sioux Narrows, Ontario to support sponsored
local heroes. 

“Central Portfolio Control is deeply honored to support
Time on the Water. Our military personnel and first responders give so much of
themselves to ensure our safety and freedom. By supporting this incredible
organization, we hope to provide them with the relaxation and appreciation they
truly deserve. It’s our way of saying thank you for their unwavering dedication
and sacrifice,” said Alicia Lesher,
President at Central Portfolio Control. 

A Bit of Relaxation

Time on the Water is committed to providing therapeutic
outdoor experiences for military members and first responders. Their programs
include fishing trips, boating excursions, and other water-based activities
designed to offer relaxation and stress relief. These experiences not only
foster camaraderie but also serve as a form of mental and emotional healing for
participants.

Time on the Water’s vision is to support local heroes
through quality on-the-water experiences, with the mission of providing a
unique on-the-water experience where our heroes come to reflect and share
camaraderie. The organization’s values of Loyalty, Compassion, Caregiving,
Generosity, Consistency, Teamwork, and Tenacity have helped build a solid
foundation for exceptional service. 

Taking Time to Reflect

The Central Portfolio Control team dedicating time off to
support Time on the Water underscores the importance of work-life balance and
community engagement. By participating in this initiative, team members can
recharge and rejuvenate, while supporting a worthwhile cause. 

Supporting Time on the Water not only provides a refreshing
break from the daily grind but also strengthens the bonds within the team,
promoting a sense of camaraderie and shared purpose. Utilizing fishing and
boating as a means to reflect on the community offers valuable insights and a
unique perspective. 

These activities provide a tranquil environment that
encourages contemplation and connection with nature, helping the CPC team to
unwind and gain clarity. These experiences can foster a sense of unity and
belonging, as participants share meaningful moments and create lasting memories
together. 

Support Time on the Water

To donate, volunteer, or learn more about Time on the Water,
please visit their website. To
learn more about what Central Portfolio Control does for its community, please
visit the CPC News Reel. 

About Central Portfolio Control

Headquartered in Minnetonka, MN, Central
Portfolio Control, Inc. (CPC) is a full-service and nationally licensed
collection agency focused on the recovery of distressed accounts receivable.
Since being founded in 1998, the Central Portfolio Control team has continued
to grow, providing top-quality services to their clients and jobs to their
local community.

On August 13, the CFPB submitted a comment to the Treasury’s RFI regarding the uses, opportunities, and risks of artificial intelligence (AI) in the financial services sector (the Treasury’s RFI was covered by InfoBytes here). The CFPB focused on monitoring the market for consumer financial products and services to identify risks and ensure compliance with federal consumer financial protection laws. 

The CFPB noted the adoption of new technologies, including AI, in the consumer financial marketplace and underscored the importance of companies competing rather than “exploiting legal loopholes.” The Bureau also noted that firms must comply with consumer financial protection laws when adopting new technologies and that regulators will enforce existing rules to prevent consumer harm. The CFPB asserted that innovation was fostered by clear regulatory requirements that do not unfairly advantage incumbent businesses. 

Additionally, the CFPB highlighted its own efforts to ensure consistent treatment under the law for similar products and services, combat anticompetitive practices, and monitor the market. Finally, the CFPB said that while AI was a significant aspect of technological innovation in the financial sector, it would be crucial that innovation grows, and that growth occurs when firms have incentives to compete by lawfully offering the best products at the lowest prices. 

CFPB: Credit card delinquencies can be credited to loosened lending standards

On August 6, the CFPB published a blog post regarding a rise in credit card delinquencies since the Covid-19 pandemic. The Bureau reported an increase in credit scores and a decrease in credit card delinquencies during the pandemic because of pandemic aid and forced savings, whereas 2022 and 2023 exhibited an increase in delinquencies. The Bureau pointed to “loosened” lending standards during the pandemic as a key reason why credit card delinquencies were about two percentage points higher than in 2019. 

According to the blog post, credit cards originated in 2021, 2022 and 2023 became delinquent more rapidly than credit cards originated in previous years. Specifically, about 8 percent of credit cards in 2022 and 2023 became delinquent around two years after origination; in 2016, the same percentage of delinquency occurred after about four years. Furthermore, the CFPB referenced data from the Fed’s Senior Loan Officer Opinion Survey to support its claim that “new credit cards were opened for borrowers who were relatively riskier despite lenders saying they were tightening standards in 2020.” The post concluded that a small but “significant” portion of those riskier borrowers went delinquent soon after getting the card. 

This week, the Biden-Harris Administration launched a comprehensive initiative aimed at addressing what it describes as everyday hassles that waste Americans’ time and money. This new government-wide effort, called “Time Is Money,” seeks to regulate various business practices that the administration claims add unnecessary burdens to consumers’ lives. The initiative includes actions from multiple federal agencies, including the Consumer Financial Protection Bureau (CFPB or Bureau) and the Federal Trade Commission (FTC).

Several key actions in the White House plan include:

• Stopping Customer Service “Doom Loops”: The CFPB is planning to issue rules or guidance to address the use of chatbots by banks and other financial institutions. The CFPB will identify when the use of automated chatbots or automated artificial intelligence voice recordings is unlawful, including in situations in which customers believe they are speaking with a human being. The CFPB also will propose a rule to require that customers can reach a human representative by pressing a single button, addressing the issue of customer service “doom loops.” The Federal Communications Commission (FCC), Department of Health and Human Services, and Department of Labor will take similar measures for businesses under their jurisdictions.

• Ensuring Accountability for Bad Service: The FTC has proposed a rule to stop marketers from using fake reviews, suppressing honest negative reviews, and paying for positive reviews, ensuring consumers can rely on genuine feedback.

• Canceling Subscriptions and Memberships: The FTC has proposed a rule that would require companies to make it as easy to cancel a subscription or service as it was to sign up for one. The FCC is also considering extending similar requirements to companies in the communications industry.

The administration also announced initiatives related to airline refunds and health insurance claims.

Troutman Pepper’s Take:

While these initiatives purportedly aim to improve consumer experience, they also raise concerns about regulatory overreach and the potential impact on businesses. The proposed rules could limit the flexibility businesses have in designing their customer service processes and managing consumer interactions. As it relates to chatbots and artificial voice recordings, this announcement seems to follow the sentiments expressed by the CFPB in a report issued in June 2023 about perceived problems with financial institutions’ use of those technologies. It will be interesting to see exactly what the Bureau does in this regard. We’ll be monitoring and reporting on this issue as it develops.

On August 2, 2024, the CFPB, the OCC, the Federal Reserve Board, the FDIC, the NCUA, the FHFA, the CFTC, the SEC and the Treasury Department proposed a joint rule intended to establish standards to promote the ability of each of the agencies to exchange and use the data that the other agencies collect (referred to as the “interoperability” of financial data across the agencies).

Congress required the agencies to adopt the joint rule when it enacted the Financial Data Transparency Act of 2022 (the “Act”). The agencies will include standards for the collection of certain data in individual rulemakings in the future.

Specifically, to the extent possible, the proposed data standards will:

• Render data fully searchable and machine-readable;
• Enable high quality data through outlines or other means, with accompanying metadata documented in machine-readable forms. The meaning of the data should be clearly defined as required by any regulatory information collection requirements;
• Ensure that a data element or data asset that exists to satisfy an underlying regulatory information collection requirement is consistently identified as such in associated machine-readable metadata; and
• Be nonproprietary or available under an open license.

“Under the proposal, any data transmission or schema and taxonomy format that, to the extent practicable, has these properties would be consistent with this proposed joint standard,” the agencies said.

In addition, the agencies also requested public comment related to data standards, data transmission formats, and schemas and taxonomies that the agencies may include in an update of the rule.

Entities that will need to report data to the government under the standards will need to obtain an appropriate legal entity identifier, if they do not currently have such an identifier. The agencies propose to establish the International Organization for Standardization (ISO) 17442-1:2020, Financial Services – Legal Entity Identifier (LEI) as the legal entity identifier. The LEI is a global, 20-character, alphanumeric, identifier standard that uniquely and unambiguously identifies a legal entity, which is documented by the ISO32. Information on the LEI is available in the preamble to the proposal.

Comments on the proposed rule are due 60 days after it is published in the Federal Register. Under the Act, the final rule must be issued no later than December 23, 2024.

ROCHESTER, N.Y. — Continental Service Group, LLC d/b/a ConServe, in conjunction with the company’s “Matching Gift Program”, donated its July ConServe Cares proceeds to Action for a Better Community. The ConServe team supports and funds the efforts of numerous local non-profit agencies that strive to make a difference. As a result of the employees’ compassion and generosity,.countless lives have been touched and enriched in our community.

“Action for a Better Community is deeply honored to be chosen as a recipient of the ConServe Cares program for July. This generous donation from ConServe will enable us to direct resources where they are most needed, furthering our mission to create a better community. We are grateful for ConServe’s commitment to promoting good corporate citizenship and supporting local initiatives. This contribution empowers us to continue our work in fostering a diverse, equitable, and inclusive environment, making a tangible difference in the lives of those we serve. Thank you, ConServe, for standing with us in our journey to uplift and empower the Rochester community.”

George Huyler, Vice President of Human Resources, said, “At ConServe giving back to communities is a core aspect of our mission statement. Our employees take pride in assisting organizations like Action for a Better Community, which offer individuals and families the chance to achieve self-sufficiency and hope.”

About ConServe

ConServe is a top-performing accounts receivable management service provider specializing in customized recovery solutions for their Clients. Anchored in ethics and compliance, and steadfast in their pursuit of excellence, they are a consumer-centric organization that operates as an extension of their Clients’ valued brands.  For over 39 years, they have partnered with their Clients to provide unmatched customer service while simultaneously helping them achieve their accounts receivable management goals. Visit us online at: www.conserve-arm.com  

About Action for a Better Community

Action for a Better Community, Inc. is a community action agency that provides services to assist people in becoming more self-sufficient. ABC responds to many issues in Monroe and Ontario County that affect residents’ lives, including healthcare, early childhood education, substance abuse, employment, economic literacy, youth services, and community building.

The world of debt collection is never at a loss for updates, but separating the important stuff from the background noise isn’t always easy. At insideARM, our goal is to help you answer those questions. We wade through the constant onslaught of updates and bring you the need-to-know highlights. Every Monday, we bring you a recap to help you stay informed and let you know why that piece of news is important.

The news was full of CFPB stories last week, but be sure to check out all of the below because – spoiler alert- one of the updates isn’t like the others. 

On Tuesday, we brought you an article detailing CFPB Director Chopra’s defense of the Medical Debt Collection Rule. The CFPB maintains that any rule is within its authority and that medical debt is not predictive on credit reports. Any organization that collects medical debt should be paying attention to the writing on the wall here. Those that don’t collect medical debt should take note of the CFPB’s reasoning and stance here. Rarely does anything with the CFPB happen in a vacuum.

On Wednesday, we brought you Hudson Cook’s CFPB Bites of the Month series. The recurring monthly blog provides highlights of everything the CFPB was up to the previous month. Of note for the ARM industry, in July 2024, the CFPB issued supervisory highlights and a rulemaking agenda. Settlements and other actions taken are also included in the post and are worth reading. The CFPB isn’t subtle. They broadcast the things that are on their radar, and those affected by the CFPB and its movements should pay close attention. The easy-to-read CFPB bites are a great way for all ARM industry participants to stay informed, regardless of their specialty. 

On Thursday, we had another CFPB story, but from a different angle. This time, it was the CFPB that was on the receiving end of a lawsuit. Noting that the CFPB proposed a settlement that would be “impossible” to abide by, the lawsuit brought by a lease-to-own company alleges that the CFPB is engaging in regulatory overreach and that their “aggressive and illegitimate” investigation of the business was unconstitutional. This CFPB has continued to push the envelope on its regulations and the entities it regulates.  It will be interesting to see how this one shakes out, as it could provide insight into what is and is not regulatory overreach. 

As always, we thank you for reading the weekly recap to stay on top of this ever-changing industry! For a breakdown of the week of August 5, 2024 click here. 

Have a question about how your company should react to the news above? We have a group for that! The weekly peer call hosted by insideARM’s Research Assistant is the perfect place to ask a question and get advice from industry colleagues who are facing the same challenges you are. Not sure if it is for you? Try it on for size with our 1-month free trial. Click here to learn more! 

ST. PAUL, Minn.– IC System is proud to announce the promotion of Nate Welbig to Vice President of Operations and member of the Executive Team. 

Nate has been with IC System since 2009, most recently serving as Director of Operations at the St. Paul Home office. IC System President & CEO John Erickson, Jr. remarked, “Nate has extensive experience managing collection projects across all our verticals. He understands our business and how we operate at IC System. He embodies our core values and consistently makes decisions that align with them. Nate appreciates the importance of performance for both our clients and IC System, and he knows how to maximize collection results.”

Over the years, Nate has been recognized with IC System’s prestigious President’s Club Award four times (2016, 2018, 2021, and 2022). He is an alumnus of the Northeast Metro Young Professionals program, chairs the IC System Innovation Committee, and has played a pivotal role in projects that have earned Agency of the Year awards for various national clients.

“As Vice President of Operations, my mission is to drive efficiency, foster innovation, and lead with integrity, ensuring our team not only meets but exceeds the expectations of our clients and stakeholders. I am honored to step into this role,” said Nate Welbig.

[article_ad]

Throughout his career at IC System, Mr. Welbig has held several positions, including Collections Representative, Team Lead, Operations Supervisor, National Operations Manager, and Director of National Operations.

About IC System

IC System is one of the largest receivables management companies in the United States. Celebrating its 82nd year in business, IC System is a family-owned, privately held accounts receivable management firm in its third generation of family ownership. IC System provides customized, tailor-made debt recovery solutions for healthcare, dental, small business, government, utilities, and telecommunications industries on a nationwide scale. Follow IC System on Twitter at @icsystem or on Linkedin.

On July 22, a lease-to-own company (plaintiff) filed a complaint against the CFPB in the U.S. District Court for the Eastern District of Texas to seek declaratory judgment and injunctive relief to halt the CFPB’s ongoing investigation and pending litigation related to the company’s business. 

The plaintiff has offered short-term renewable lease solutions to consumers via Rental Purchase Agreements (RPA) for over a decade that allow consumers to take possession of household merchandise and other goods, such as furniture, appliances, and computers, that they would otherwise be unlikely to afford. Lease-to-own transactions have been regulated at the state level for decades and were recognized as distinct from credit transactions, given that the RPAs do not involve a loan of money or a requirement to repay. The RPAs clearly stated that the underlying transaction was “not a loan or a credit transaction.”

The CFPB, after almost four years of investigation incurring “substantial legal fees,” appeared to have taken the position that these transactions were credit transactions subject to consumer financial regulatory laws, including the CFPA, TILA, and the EFTA, to regulate lease-to-own transactions under federal law. The plaintiffs have countered that this equated to “regulatory overreach” for three reasons: 

1. the plain language of the CFPA, TILA, and the EFTA were clear in that they do not extend to lease-to-own transactions; 

2. regulation of the lend-to-own industry rests with the states and the federal government has declined to pass its own form of legislation addressing regulation of the same; and 

3. the courts rather than the CFPB as a federal agency must decide whether the statutes permit the CFPB to assert its regulatory power following the Loper Bright ruling. 

The plaintiff also asserted that the CFPB’s “aggressive and illegitimate” investigation of the plaintiff’s lend-to-lease business was unconstitutional in that it (a) violated due process rights for failure to provide fair notice of federal regulation and (b) stemmed from the funding of the Bureau that was unconstitutional.

The complaint alleged that the CFPB proposed a settlement agreement that the company has deemed “impossible” to accept that subsequent efforts by the company to reach agreeable terms and schedule a settlement meeting have been rejected by the CFPB, and that the Bureau was preparing to file a lawsuit against the company. The plaintiffs sought declaratory relief in that the CFPB investigation has exceeded its statutory authority and that the CFPB’s investigation was unconstitutional. 

The CFPB  had a busy July. In this article, Hudson Cook shares some of the top CFPB “bites” of the month so you can stay on top of recent developments.

Bite 12: The CFPB Announces 2023 Data on Mortgage Lending

On July 11, 2024, the CFPB and federal banking agencies announced publication of the 2023 Home Mortgage Disclosure Act (“HMDA”) data. The data covered 2023 mortgage lending transactions reported under the HMDA. The CFPB noted that for 2023, the number of reporting institutions increased by about 14.6% from 4,460 in the previous year to 5,113. For 2023, the data include information on 10 million home loan applications, a decrease from the 14.3 million reported in 2022. The share of mortgages originated by non-depository, independent mortgage companies accounted for 63.1% of first lien, one- to four-family, site-built, owner-occupied closed-end home-purchase loans in 2023, up from 60.2% in 2022. In 2023, Black or African American applicants were denied for first lien, one- to four-family, site-built, owner-occupied conventional, closed-end home purchase loans at a rate of 16.6%. Hispanic-White applicants had a denial rate of 12.0%. Asian applicants were denied in 9% of transactions. Non-Hispanic-White applicants were denied in 5.8% of transactions.

Bite 11: CFPB’s Auto Finance Data Pilot Report – Negative Equity

On June 17, 2024, the CFPB released its first report in a series using data collected from 3 banks, 3 captive finance companies, and 3 independent finance companies that received “market monitoring” orders from the CFPB in February of 2023. Key findings from the report include:

• More than 10% of consumers financed negative equity from a prior vehicle financing transaction into a new one.
• Consumers who financed negative equity from a prior vehicle transaction into a new transaction were more likely to have their account assigned to repossession within two years.
• Consumers who financed negative equity financed larger transactions than consumers with a positive equity trade-in, which resulted in higher average monthly payments.
• Consumers who financed negative equity had lower credit scores, lower household income, longer terms and were more likely to have a co-borrower than consumers with no trade-in or a positive equity trade-in.
• Consumers who financed negative equity had larger LTV and payment-to-income ratios.
• Nearly a quarter of consumers financing less expensive vehicles financed negative equity into their transactions, compared to nearly 16% of consumers who purchased more expensive vehicles.
• The percentage of negative equity financed compared to the prices paid for the vehicle was larger for consumers who financed less expensive vehicles.

Bite 10: CFPB Issues 2023 Fair Lending Annual Report to Congress

On June 26, 2024, the CFPB issued its 2023 Fair Lending Annual Report to Congress. The Dodd Frank Act requires the CFPB to annually report on public enforcement actions taken under the Equal Credit Opportunity Act and to report on HMDA data. The CFPB reported that it took action against a so-called “repeat offender” national bank for allegedly discriminating against Armenian Americans applying for credit cards. The CFPB also reported that the CFPB and Department of Justice sued a developer for allegedly targeting Latinos with inferior mortgage products. The CFPB further reported that it identified “significant issues” with inaccurate HMDA data and filed two enforcement actions for reporting inaccurate data. The CFPB and its interagency partners continued to address appraisal bias by filing court briefs, issuing proposed guidance, and carrying out rulemaking. The CFPB finalized the Small Business Lending rule, issued a circular on adverse action notice requirements, and issued numerous fair lending-related reports and data.

Bite 9: CFPB Publishes Summer 2024 Supervisory Highlights

On July 2, 2024, the CFPB published its Summer 2024 Supervisory Highlights. The report shared key findings from recent supervisory examinations of auto finance servicing, student loan servicing, and debt collection. The CFPB examiners found that auto servicers engaged in unfair practices by failing to debit consumers’ final payment via their autopay system without adequate notification to consumers enrolled in autopay that they needed to pay their final payment manually. The CFPB examiners reportedly discovered that student loan servicers failed to provide adequate avenues for communication due to excessive hold times, misrepresented which forms consumers should use to enroll in certain programs, and failed to notify consumers of preauthorized funds transfers that exceeded the previous transfer amount. The CFPB examination of debt collection institutions identified alleged violations of Regulation F and unfair practices related to the statute of limitations in credit card collections. The CFPB’s examination of medical payment products, such as medical credit cards, revealed that consumers frequently complained of healthcare providers misrepresenting the specifics of “deferred interest” promotions and feeling pressured to open a credit card account while receiving treatment. The CFPB’s examination of deposit and prepaid accounts revealed that entities allegedly engaged in unfair practices with respect to account freezes and observed issues related to failing to provide periodic statements for allotment accounts.

Bite 8: CFPB Publishes its Spring Rulemaking Agenda

Recently the CFPB published its Rulemaking Agenda addressing which rules may be forthcoming this year. The CFPB describes its “final rule stage” as including rules on overdraft, FIRREA, personal financial data rights, PACE Financing, the Repeat Offender Registry, the Form Contracts Registry, Fees for Instantaneously Declined Transactions, and the Larger Market Participant Rule for Digital Consumer Payment Applications. Those rules in the proposal stage include FCRA Rulemaking, Mortgage Servicing Rulemaking, Financial Data Transparency Act rulemaking, and Regulation AA Rulemaking. The Pre-rule phase includes rulemaking on mortgage closing costs. With respect to the Regulation AA proposal, the CFPB noted that before the Dodd-Frank Act, the “Federal Reserve Board’s Regulation AA made it unlawful for banks to include or enforce certain provisions in consumer credit contracts,” and that when the “Dodd-Frank Act created the CFPB, it removed the Board’s responsibility for issuing Regulation AA.” The CFPB went on to say that it “is considering whether to issue regulations regarding the inclusion or enforcement of certain provisions in contracts for consumer financial products or services.”

Bite 7: CFPB Proposes Mortgage Servicing Rules

On July 10, 2024, the CFPB proposed new mortgage servicing rules. In 2022, the CFPB requested information from the public regarding improving protections for borrowers facing financial hardship. The CFPB claims that both the mortgage industry and borrower advocates responded that a simpler, more flexible approach to mortgage assistance would be helpful. Many commenters noted that both borrowers and servicers benefited from the adjustments made during the COVID-10 pandemic that allowed leniency from the 2014 regulatory framework. The CFPB’s proposal, if finalized, would limit the fees a servicer can charge a borrower while the servicer is reviewing possible options to help the borrower avoid foreclosure. The proposal would also allow servicers to have more flexibility to review borrowers for each option individually through streamlined loan modifications and fewer paperwork requirements. Moreover, the proposal would require servicers to provide more tailored notices to borrowers, including changing the notices that borrowers receive shortly after missing a payment to include information about who the loan investor is and how to get information regarding available assistance. The proposal would also require servicers to provide notices in English and Spanish. It would also give borrowers who received marketing materials in another language the option to request mortgage assistance communications in that same language. The CFPB will accept public comments on the rule until September 9, 2024.

Bite 6: CFPB Extends Compliance Dates for Section 1071

On June 25, 2024, the CFPB issued an interim final rule to extend the compliance deadlines for the small business lending rule. The compliance deadlines were previously stayed pending the outcome of the CFSA v. CFPB Supreme Court case. The interim final rule extends the compliance dates by 290 days, which is the time that elapsed during the stay of the rule pending the CFSA decision. The interim final rule will extend compliance as follows: Tier 1 institutions: new compliance date of July 18, 2025; Tier 2 institutions: new compliance date of January 16, 2026; and Tier 3 institutions: new compliance date of October 18, 2026.

Bite 5: CFPB Settles with a Nonbank Mortgage Company

On June 18, 2024, the CFPB reached a proposed settlement with a nonbank mortgage originator and servicer to resolve allegations that the company violated the HMDA, its implementing Regulation C, the Consumer Financial Protection Act, and a 2019 CFPB consent order. In the 2019 CFPB consent order, the CFPB alleged that the company intentionally misreported certain data fields concerning borrower race, ethnicity, and sex from 2014 through 2017. In the current case, the CFPB alleged that the company’s HMDA data continued to be deficient after the 2019 settlement, and that the company did not implement adequate changes to its compliance management system. The nonbank mortgage company agreed to pay a $3.95 million penalty, and agreed to regularly audit, test, and correct its HMDA data among other remedial actions.

Bite 4: CFPB Takes Action Against Reverse Mortgage Servicing Contractor and its Affiliates

On June 18, 2024, the CFPB took an action against a reverse mortgage servicing contractor and its affiliates alleging violations of the CFPA and RESPA. In this action, the CFPB alleged that the companies failed to maintain staffing adequate to handle as many as 150,000 borrowers per year, preventing borrowers from fulfilling their annual occupancy requirements, obtaining loan payoff statements, and finding foreclosure alternatives. The consent orders permanently ban three of the four servicers from reverse mortgage servicing and requires the remaining entity to develop a compliance plan before engaging in reverse mortgage servicing again. The consent order requires the subcontracting entities to pay $11.5 million in consumer redress and a $5 million civil money penalty, the entity that was holder of the reverse mortgage servicing contract must pay a nominal civil penalty of $1, based on its inability to pay.

Bite 3: CFPB Takes Action Against Owners of Online Lending Company

On June 17, 2024, the CFPB took action against owners of an online lending company. The CFPB alleges that they fraudulently concealed assets to avoid paying a judgment of more than $43 million to the CFPB. The CFPB sued the online lending company and its owner back in 2015 for allegedly lying to consumers about the cost of short-term loans and withdrawing money from borrowers’ accounts without permission. In April 2023, the CFPB filed a fraudulent transfer action alleging that the couple transferred funds to hinder, delay, or defraud the CFPB, in violation of the Federal Debt Collection Procedures Act. The CFPB alleged that the husband fraudulently transferred $12.3 million to his wife through a series of revokable trusts. The CFPB’s order will require the husband and wife to pay $7 million of an imposed $12.3 million judgment, with the remaining suspended due to demonstrated inability to pay more.

Bite 2: CFPB Takes “Repeat Offender” Action Against National Bank

On July 9, 2024, the CFPB issued a consent order against a national bank alleging unlawful repossessions. The CFPB claims the bank repossessed vehicles when the delinquency was caused by the bank charging allegedly unnecessary and duplicative fees for insurance coverage when the consumers already had insurance. The CFPB alleged that the national bank conducted unlawful sales practices by charging fees that allegedly provided no value to the consumers. The CFPB further alleges the bank opened unauthorized accounts and enrolled customers in products without their consent. The CFPB claims the bank violated the Fair Credit Reporting Act; the Electronic Fund Transfer Act/Regulation E; and the Consumer Financial Protection Act. The consent order requires the bank to pay redress to 35,000 consumers, pay a $5 million penalty, and pay a $15 million penalty for opening unauthorized accounts. The bank will also be prohibited from setting employee sales goals that incentivize opening accounts without customer authorization.

Bite 1: Appeals Court Rules in Favor of CFPB in Redlining Case

On July 11, 2024, it was reported that a three-judge panel of the U.S. Court of Appeals for the 7th Circuit ruled that the Equal Credit Opportunity Act applies not just to credit applicants but also to prospective applicants. The CFPB filed a redlining lawsuit against a Chicago mortgage lender in 2020, alleging that the company’s CEO made disparaging remarks on a radio show that could have discouraged Black potential customers from submitting applications, in violation of the ECOA and Regulation B. The district court dismissed the CFPB’s lawsuit, and the 7th Circuit reversed that decision. The 7th Circuit judges held that the Illinois federal court should not have dismissed the lawsuit because “[w]hen the text of the ECOA is read as whole, it is clear that Congress authorized the imposition of liability for the discouragement of prospective applicants.” The 7th Circuit wrote, “The district court held that ECOA does not authorize the imposition of liability for the discouragement of prospective applicants. We take a different view.” The case was reversed and remanded back to the district court. The mortgage lender could appeal the case to the full 7th Circuit or to the Supreme Court.

Extra Bite: FTC Takes Action Against Online Used Car Dealer

On July 2, 2024, the FTC proposed a settlement with an online used car dealer to resolve allegations that the company violated the FTC Act, the Used Car Rule, the Pre-sale Availability Rule, and the Mail, Internet, and Telephone Order Rule (“MITOR”). The FTC alleged that the company failed to deliver purchased cars within the advertised timeframe, failed to conduct the thorough inspection process as advertised, and failed to provide the requisite Buyers Guide until late in the purchase process. The FTC alleged that the company’s website and advertising told consumers that cars would be delivered in 14 days or less, but that the company often did not meet this delivery timeline. The FTC also alleged that the company regularly failed to give consumers the opportunity to consent to a longer delivery timeline or to cancel their purchase and receive a refund, as required by MITOR. The company neither admitted nor denied the allegations, but agreed to pay $1 million to the FTC for consumer refunds, agreed to document all claims about promises it makes regarding shipping times, agreed to refrain from making misleading claims about inspections and shipping times, and agreed to abide by the rules at issue in this case.

Still hungry? Please join Hudson Cook for our next CFPB Bites of the Month. If you missed any of our prior Bites, including the webinar that covered the above topics, request a replay on the Hudson Cook website here. 

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This article is provided for informational purposes and is not intended nor should it be taken as legal advice.  The views and opinions expressed in this article are those of the authors in their individual capacity and do not reflect the official policy or position of the partners of Hudson Cook, LLP or clients they represent.