Pay Your Credit Card Bill Before Vehicle Redemption?
The Consumer Financial Protection Bureau (CFPB) released a report Wednesday (July 26) that found illegal tactics at work in the auto lending, medical debt and payday loan sectors.
“Today’s report furthers our efforts to highlight conduct that violates federal law, including the prohibition on abusive practices in consumer financial services,” CFPB Director Rohit Chopra said in a news release. “The CFPB is also inspecting more financial data brokers engaged in consumer reporting, as well as nonbank entities using authorities that previously went unused.”
Among the findings were what the bureau called a “significant shift in the auto lending market,” with car prices spiking, leading to larger loan amounts, higher monthly payments, and more loan delinquencies, with consumers often misled by lenders about the quality of car for which they were eligible.
Below is a list of what the CFPB considered the most significant compliance issues identified by examiners during their supervisory activities:
Auto Lending/Servicing:
- Examiners found that some dealers fraudulently documented options that were not actually present on the vehicle — sometimes called “powerbooking”. In the instances where these discrepancies were identified, servicers did not reduce the amount the consumers owed on the loan.
- Examiners found that some institutions engaged in deceptive marketing when they used advertisements that pictured cars that were significantly larger, more expensive, and newer than the advertised loan offers related to.
- Examiners found that some servicers engaged in unfair acts or practices by suspending recurring automated clearing house (ACH) payments prior to consumers’ final payment without notifying the consumers that the final payment must be made manually, resulting in missed payments and late fees.
- Examiners found some servicers engaged in blanket cross-collateralization by accelerating and requiring payments from consumers on unrelated debts, such as credit cards, before consumers could reclaim their repossessed vehicles.
Download The Entire Report Here
