The Consumer Financial Protection Bureau is responsible for overseeing depository institutions and credit unions with total assets of more than $10 billion and their affiliates. The Bureau also has authority under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) to oversee nonbanks of any size within specific markets. This includes mortgage companies, payday lenders, and private education lenders.
A recent report from the Consumer Financial Protection Bureau is shining a light on the sometimes illegal practices that payday lenders and debt collectors engage in.
The bureau’s fourth annual Supervision Highlights report finds several unfair practices among the payday lending industry, including deceptive collections and lack of oversight after contracting with third-party collectors.
It has been discovered that some payday lenders attempted to collect debt by threatening legal action or charging additional fees to borrower’s accounts. Some lenders even lied to consumers about promotions as a way to prompt them to call back about their debt.
Fortunately, from November 2013 to February 2014, regulators were able to return more than $70 million to 775,000 consumers. In addition, the CFPB contributed to a recent enforcement action against Bank of America and FIA Card Services, which resulted in the return of approximately $727 million to consumers for illegal practices related to credit card add-on products.
When it comes to debt collection, the CFPB finds that many had intentionally violated the Fair Debt Collection Practices Act (FDCPA) by misleading consumers about litigation. It was also finds that debt collectors were making a large volume of illegal calls to consumers.
In one case, a debt collector made roughly 17,000 calls to consumers outside the times allowed by the FDCPA. That company also violated the FDCPA by calling more than 1,000 consumers as many as 20 times in two days.
The CFPB says companies that continue to deceive consumers will be held accountable.