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CFPB details UDAAP findings in new report
In a new Supervisory Highlights report issued Wednesday, the CFPB detailed its unfair, deceptive, and abusive acts or practices (UDAAP) findings across consumer financial products, including auto lending, medical debt collection, and payday lending.
On auto lending, the CFPB observed a significant shift in the market due to the sharp rise in car prices during the coronavirus pandemic, leading to “larger loan amounts, higher monthly payments, and consequently, a higher rate of loan delinquencies.” The CFPB found that consumers were misled and servicers charged fraudulent interest on inflated loan balances, cancelled automatic payments without sufficient notice - which led to unavoidable late fees, and engaged in illegal collection practices after repossession.
Regarding medical debt and general debt collection, the CFPB found that debt collectors violated the Fair Debt Collection Practices Act by collecting an amount not permitted by law or agreement. Of note, the bureau recently announced it will host a hearing on medical billing and collections, with a focus on medical payment products – such as medical credit cards and installment loans – featuring CFPB Director Rohit Chopra and agency officials from the White House, the Department of Health and Human Services, and the Treasury Department.
In addition, the CFPB found unfair and abusive acts employed by payday lenders in their collection practices, including false collection threats and inserting language in loan agreements that prohibited consumers from revoking their consent for the lender to contact them.
The report covers findings from CFPB supervisory examinations completed from July 2022 to March 2023; view the full report.
Earlier this month, in response to the CFPB’s policy statement on how it defines “abusive” under its UDAAP authority, NAFCU reiterated the association’s call for the bureau to provide more clarity through an official rulemaking process. NAFCU will continue to work with the bureau on the issue and provide credit unions with updated resources to support compliance.