At a glanceFriday, January 13, 2023

Collection Industry News At A Glance - January 13, 2023
Friday January 13, 2023
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CFPB Tackles Fine Print in Consumer Financial Contracts

Downloading an app, buying a product or service, or otherwise interacting with a company frequently requires consumers to consent to multi-page contracts. In a new proposed rule, the CFPB would require nonbank financial companies subject to the CFPB’s supervisory jurisdiction to register any use of such form contracts if they contain terms that seek to waive or limit consumer rights and legal protections.

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Keeping Pace with Today’s Challenges: FCC Proposes New Data Breach Rules for CPNI

Prompted by a rapid increase in frequency, sophistication, and scale of data leaks and data breach legislation in recent years, the Federal Communications Commission (FCC)  unanimously voted to kick off a proceeding aimed at adopting new proposals to update data breach response obligations involving Customer Proprietary Network Information (CPNI).

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Credit Unions Are Falling Behind the Innovation Curve

Credit unions are hitting an innovation wall, and partnering may be the best way to clear it. At a time when consumers, and credit union (CU) members particularly, are seeking more product innovation from these financial institutions, budget constraints and a yearlong macroeconomic beating find CUs cutting back on in-house development efforts.

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CFPB Moves Forward With Proposed Rule Establishing Public Registry of Terms and Conditions in Form Contracts

As forecasted in its 2022 Fall Rulemaking Agenda discussed here, today the Consumer Financial Protection Bureau (CFPB) published a proposed rule with request for public comments that would require certain nonbank covered entities, with limited exceptions, to submit information on terms and conditions in their form contracts that “seek to waive or limit individuals’ rights and other legal protections.”

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9th Circuit affirms decision in FCRA, CFPA, and TSR suit

In December, the U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s ruling holding an individual liable for violations of the FCRA, the TSR, and the CFPA after the defendant, who allegedly “played a central role” in the scheme — and other defendants — were sued by the CFPB for allegedly obtaining individuals’ credit reports illegally and charging advance fees for debt relief services

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Court Finds Letter to Debtor is Not a Debt-Collection Communication Under the FDCPA

Recently, in Velez v. Absolute Resolutions Investments., LLC, the district court for the Northern District of Illinois confirmed the long-standing principle that not all communications sent from a debt collector to a debtor are governed by the Fair Debt Collection Practices Act (FDCPA). Instead, the communications must be in connection with the collection of a debt to fall within the statute’s purview.

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U.S. Foreclosure Activity Doubles Annually But Still Below Pre-Pandemic Levels

IRVINE, Calif. – Jan. 12, 2023 — ATTOM, a leading curator of real estate data nationwide for land and property data, today released its Year-End 2022 U.S. Foreclosure Market Report, which shows foreclosure filings— default notices, scheduled auctions and bank repossessions — were reported on 324,237 U.S. properties in 2022, up 115 percent from 2021 but down 34 percent from 2019, before the pandemic shook up the market. Foreclosure filings in 2022 were also down 89 percent from a peak of nearly 2.9 million in 2010.

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New York Enacts Foreclosure Abuse Prevention Act

On December 30, 2022, New York Governor Kathy Hochul signed the Foreclosure Abuse Prevention Act (FAPA) into law. The legislation remained unchanged from its passing back in May 2022 despite many industry experts expecting Governor Hochul to amend certain portions, including its retroactive effect.

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Wells Fargo Pulls Back From Mortgage Market

Wells Fargo, once the nation's biggest mortgage bank, said it will step back from the market and cut thousands of workers, swelling a wave of industry layoffs as rising rates slow home purchases.

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OCC Issues Revisions to Fair Lending Booklet

WASHINGTON—The Office of the Comptroller of the Currency (OCC) today issued a revised version of the “Fair Lending” booklet of the Comptroller’s Handbook.

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Servicemember reports about identity theft are increasing

Identity theft can quickly reverse a good credit report, filling it with unknown, maxed-out credit card accounts or collections accounts for mystery debts. It can spell trouble for anyone, but for servicemembers, identity theft resulting in negative information on a credit report can lead to the loss of a security clearance or even discharge.

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New Jersey reaches $27.3 million settlement with merchant cash advance operation

On January 3, the New Jersey attorney general announced a $27.4 million settlement with a private equity firm, its parent company, and six other associated companies (collectively, “respondents”) to resolve allegations related to violations of the New Jersey Consumer Fraud Act (CFA).

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CFPB Takes Action to Halt Debt Collection Mill From Bombarding Consumers with Junk Lawsuits

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) has reached a settlement in its lawsuit against law firm Forster & Garbus, LLP for illegal debt-collection practices. If approved by the court, the proposed settlement would prohibit Forster & Garbus from filing any new lawsuit against a consumer unless it has specific documents supporting the debt and certifies that an attorney reviewed those documents.

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Statement of CFPB Director Rohit Chopra on Proposed Registry of Supervised Nonbanks that Use Form Contracts to Impose Terms and Conditions that Seek to Waive or Limit Consumer Legal Protections

Today, the CFPB is proposing to create a registry of contract terms that financial companies use to censor their customers and force individuals into surrendering their legal rights.

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CFPB Proposes Rule to Establish Public Registry of Terms and Conditions in Form Contracts That Claim to Waive or Limit Consumer Rights and Protections

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) proposed a rule to establish a public registry of supervised nonbanks’ terms and conditions in “take it or leave it” form contracts that claim to waive or limit consumer rights and protections, like bankruptcy rights, liability amounts, or complaint rights.

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DFPI Debt Collection Advisory Committee

The DFPI will be soliciting applications for members to the Debt Collection Advisory Committee at the end of January.  Financial Code Section 100025 provides for a Debt Collection Advisory Committee:

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Americans lean more on credit cards as expenses stay high: 46% of cardholders now carry debt from month to month

As the personal savings rate sank near an all-time low, credit card balances jumped 15% year over year, according to the latest quarterly report from the Federal Reserve Bank of New York, notching the largest increase in more than 20 years.

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No License? No Standing! District Court Dismisses FDCPA Suit Against Unlicensed Debt Collector For Lack Of Standing

On January 4, the District Court of New Jersey dismissed a Fair Debt Collection Practices Act (FDCPA) complaint against an unlicensed debt collector for lack of standing. In Valentine v. Unifund CCR, LLC, et al., the court held that merely receiving a letter from an unlicensed debt collector is insufficient to establish a concrete injury for Article III purposes.

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What new supervised institutions need to know about working with the CFPB

While the CFPB has longstanding supervisory relationships with many institutions, we also conduct exams or other supervisory activities at companies for the first time. Here’s what newly supervised institutions can expect from a supervisory relationship with the CFPB.

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Federal Regulators Jointly Release New FDCPA Examination Procedures

On Dec. 15, 2022, the Federal Financial Institutions Examination Council’s (FFIEC) Task Force on Consumer Compliance adopted revised examination procedures for the Fair Debt Collection Practices Act (FDCPA) and its implementing regulation, Regulation F.

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New Proposed Regulations Would Transform Income-Driven Repayment by Cutting Undergraduate Loan Payments in Half and Preventing Unpaid Interest Accumulation

Today, the U.S. Department of Education (Department) proposed regulations to reduce the cost of federal student loan payments, especially for low and middle-income borrowers. The regulations fulfill the commitment President Biden laid out in August when he announced his Administration's plan to provide student debt relief for approximately 40 million borrowers and make the student loan system more manageable for student borrowers.

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End of student loan payment pause could lead to more credit card debt

The countdown until the student loan payment pause is lifted in June is ticking, and some experts worry that once payments resume, many Americans may dig themselves deeper into credit card debt.

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US car owners struggle as more loan payments climb above $1,000 a month

Almost 16 per cent of consumers who financed a new car in the fourth quarter have monthly payments reaching that level, up from 10.5 per cent a year earlier, according to data collected by Edmunds, a provider of data on the automotive industry.

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Credit card balances reached a record-setting $866 billion in the third quarter of last year, which represents a year-over-year increase of 19%.

Personal loans and credit card debt reached record levels in 2022 due to financial pressures brought on by high inflation and climbing interest rates, according to third-quarter data from a consumer credit reporting agency.

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CFPB adds six new items to Fall 2022 rulemaking agenda, including overdraft fees, fees for insufficient funds, and credit card penalty fees

The CFPB has published its Fall 2022 rulemaking agenda as part of the Fall 2022 Unified Agenda of Federal Regulatory and Deregulatory Actions.  The agenda’s preamble indicates that “[t]he Bureau reasonably anticipates having the regulatory matters identified [in the agenda] under consideration during the period from December 1, 2022 to November 30, 2023.”

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Pax­ton Peti­tions FCC to Bet­ter Pro­tect Con­sumers From Ille­gal Spam Texts

Attorney General Paxton joined a multistate comment letter to the Federal Communications Commission (“FCC”) to prevent consumers from receiving unwanted, illegal spam text messages.  

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Congressional Research Service Issues In Focus White Paper on Financial Cybersecurity

WASHINGTON, Jan. 7 -- The Congressional Research Service issued the following In Focus white paper on financial cybersecurity (No. IF11717) on Jan. 5, 2023, by financial economics analysts Andrew P. Scott and Paul Tierno.

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The FCC’s Ruling on Call Consent: Where Do We Go From Here?

A modified rule on call exemptions and obtaining consumers’ consent from the Federal Communications Commission will take effect this year, and ACA International is working on resources to help members meet their compliance responsibilities.

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Industry Events

Collection and Recovery Solutions 2023

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RMAi 2023 Annual Conference

Join us in Las Vegas, February 6-9, for the 2023 RMAI Annual Conference.

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