CFPB Compliance Aid: Debt Collection Rule – Disclosing the Model Validation Notice

The Debt Collection Rule (Rule) requires debt collectors to provide consumers with certain information to help them identify the debt being collected. This information is called the “validation information” and consists of information about the debt, information about the consumer’s protections and rights during collection of the debt, and information to facilitate the consumer’s ability to exercise those rights. The Rule details how a debt collector can provide the validation information in a validation notice.

This is a Compliance Aid issued by the Consumer Financial Protection Bureau. The Bureau published a Policy Statement on Compliance Aids, available at https://www.consumerfinance.gov/policy-compliance/rulemaking/finalrules/policy-statement-compliance-aids/, that explains the Bureau’s approach to Compliance Aids.

The New York Large Print Notice Is Fuzzy in Any Format

On Oct. 8, S.737A was signed into New York law, “requiring debt collectors to inform debtors that written communications are available in large print format.”  The legislation becomes effective Nov. 7, 2021.

Eleventh Circuit Vacates Hunstein I, But Still Holds Mail Vendor Usage Violates FDCPA

In a surprise move last week, the Eleventh Circuit vacated its prior ruling in Hunstein but nevertheless doubled down on in a decision that will continue to allow the new wave of claims under the Fair Debt Collection Practices Act (“FDCPA”) to continue in federal courts.  Read on to learn more and what it means for the debt collection industry going forward assuming this 2-1 decision stands.

Disputes on Consumer Credit Reports

Because of the importance of credit reporting to the consumer finance system, the accuracy of credit reports is a perennial policy concern. Studies have found that a substantial minority of consumers have errors on their credit reports with the three nationwide consumer reporting agencies (CRAs), including errors substantial enough to meaningfully affect consumers’ credit scores.

High home prices could drop in November as mortgage rates increase, economist says

Home prices are rising, though not at the same record pace as earlier this year. As a result, economists say both homebuyers and homeowners should expect substantial home value increases annually, but decreases month-over-month toward the end of 2021.

40% of organizations suffered a cloud-based data breach in the past 12 months

Despite increasing cyberattacks targeting data in the cloud, 83% of businesses are still failing to encrypt half of the sensitive data they store in the cloud, raising even greater concerns as to the impact cyber criminals can have. 40% of organizations have experienced a cloud-based data breach in the past 12 months, according to a study conducted by 451 Research.

CFPB Finds Credit Report Disputes Far More Common in Majority Black and Hispanic Neighborhoods

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) today released research finding that consumers in majority Black and Hispanic neighborhoods, as well as younger consumers and those with low credit scores, are far more likely to have disputes appear on their credit reports. The new research is a part of a series of reports focusing on trends in the consumer financial marketplace, and uses data on auto loan, student loan, and credit card accounts opened between 2012 and 2019.

Eleventh Circuit Keeps Troublesome FDCPA Ruling Despite Rehearing, Dissent

The Eleventh Circuit Court of Appeals has issued its ruling on the motion for rehearing in Hunstein v. Preferred Collection and Management Services, Inc., Case No. 19-14434 but most of the troublesome aspects of the Court’s panel opinion remain.  In Hunstein, the Eleventh Circuit reversed the dismissal of a Fair Debt Collection Practices Act (“FDCPA”) lawsuit alleging that the Defendant, a debt collector, had violated third party disclosure prohibitions in the FDCPA by using a mail vendor to mail its dunning letters. 

FTC Finalizes Financial Institution Safeguards Rule

On October 27, 2021, the Federal Trade Commission (FTC) announced a newly updated rule under the Gramm-Leach-Bliley Act (GLBA) intended to require financial institutions to strengthen their data security safeguards to protect consumer financial information. The newly updated rule, the Standards for Safeguarding Customer Information (Safeguards Rule), amends the FTC’s 2002 Safeguards Rule, and comes in the wake of significant data security incidents and cyberattacks in the consumer financial services sector.

New York Adds ADA-Type Requirement and Teeth to Debt Collection Procedure Act

On October 8, the governor of New York signed Bill No. AO-2260A to assist borrowers who need accommodation for visual impairments. Bill No. AO-2260A is “an act to amend the general business law, in relation to requiring debt collectors to inform debtors that written communications are available in large print format” (or other different formats). In short, this law will require “principal creditors” and “debt collectors” to inform a consumer in their “initial communication” that the consumer may request future communications in a “reasonably accommodatable format” such as large print, braille, audio compact disc, or other alternatives. This law becomes effective November 7, 2021.

CFPB Issues Debt Collection Guidance and Creates More Uncertainty for Mortgage Servicers

On October 29, 2021 — just 32 days prior to the November 30, 2021 effective date — the Consumer Financial Protection Bureau (CFPB) released new guidance regarding the debt validation notice requirements that are part of the upcoming debt collection rules. Specifically, the CFPB provided (1) new Frequently Asked Questions related to the special rule for certain residential mortgage debts when a mortgage servicer might otherwise be required to fully display the itemization information; and (2) a 27-page guidance document explaining how debt collectors comply with the itemization information requirements when populating a debt validation notice. Earlier in October, the CFPB published on its website a Spanish translation of the debt validation notice model form.

CFPB Director Chopra Appears at First House Hearing Since Approval as Director

On October 28, newly approved CFPB director, Rohit Chopra, made his first appearance before the House Financial Services Committee since his narrow approval by the Senate.  Director Chopra focused on topics with bipartisan appeal:  the Bureau’s enforcement efforts aimed at large companies, ways it may try to help small businesses (including small financial companies) and the importance of strong relationships between banks and customers.

Crucial Conversations All Debt Collectors Should Have with their Creditors

With the CFPB having decided to leave the effective date of the Debt Collection Rule as November 30^th, the push is on for debt collectors to ensure their compliance with the Rule by that date. As debt collectors make the final push towards implementation, there are crucial conversations debt collectors should be having with creditors to ensure a smooth transition.

Statement of CFPB Director Chopra on Stablecoin Report

WASHINGTON, D.C. — CFPB Director Rohit Chopra released a statement today regarding the Report on Stablecoins issued by the President’s Working Group on Financial Markets, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation.

Fintech lender Enova says CFPB probing loan processing

(Reuters) - The U.S. Consumer Financial Protection Bureau is investigating loan processing issues at fintech lender Enova International Inc, the company said on Thursday.

FHFA to permanently allow desktop appraisals: How can it make the mortgage process easier?

The Federal Housing Finance Agency (FHFA) Acting Director Sandra Thompson announced at the Mortgage Bankers Association (MBA) conference in San Diego that it will allow lenders to use desktop appraisals for conventional loans. These alternative valuation products will improve the homebuying process for many borrowers.

Americans have $1.42 trillion in auto loan debt and industry is off the rails, report says

It's no secret that the price of new and used cars climbed exponentially in the past decade, especially in the last year and a half. As vehicles get more expensive, there's a perfect storm: Buyers need to borrow money and lenders are ready to charge for that money. According to a report from Consumer Reports last Wednesday, the auto loan industry resembles the Wild West more than we thought.

U.S. consumer watchdog to review Big Tech data, promote lending competition

WASHINGTON, Oct 27 (Reuters) - Chief consumer finance watchdog Rohit Chopra told U.S. lawmakers on Wednesday his agency will review Big Tech's impact on the flow of money in the economy as leading technology firms use real-time consumer payments systems that collect huge amounts of personal data.

U.S Mortgage Rates Rise for a 3rd Consecutive Week

Mortgage rates were on the rise again, holding onto 3% levels for the 5th time since 21st April. In the week ending 28th October, 30-year fixed rates increased by 5 basis points to 3.14%. Compared to this time last year, 30-year fixed rates were up by 33 basis points.

Recent Settlement with Massachusetts AG Addresses Compliance Emphasis on Collection Calls, Repossession Notices, and Service Contract Sales

On September 1, 2021, the Commonwealth of Massachusetts, through the Massachusetts attorney general, entered into a settlement agreement and related Assurance of Discontinuance with a sales finance company. The AOD identifies three areas that should be of particular compliance emphasis for sales finance companies doing business in Massachusetts:

• limitations on the frequency of collection calls;
• content requirements for pre- and post-sale repossession notices; and
• disclosures required in connection with the sale and financing of optional motor vehicle service contracts.

TransUnion Marks Five-Year Anniversary of its Innovation Lab as More Financial Institutions Seek New Models to Offer Access to Affordable Credit

TransUnion (NYSE: TRU) marked the five-year anniversary of its popular Innovation Lab this week during the Money 20/20 USA conference. Since its inception the Innovation Lab has helped dozens of banks, insurers, lenders and other financial institutions with customized data and analytics capabilities.

Opening Statement of Director Rohit Chopra before the House Committee on Financial Services

Chairwoman Waters, Ranking Member McHenry, and Members of the Committee, thank you for holding this hearing today. 2021 is far different than 2020. The economy is reopening and growing. Labor demand is strong, and employers have added millions of new jobs. Household spending has rapidly increased, and demand for housing is robust. While these macro indicators are promising, the recovery has been uneven.

CA Laws for Debt Collection, Money Transfer Services, and Consumer Subscription Services Signed by Governor Newsom

California enacted six new laws in October expanding rights for consumers, including new disclosure and consumer notification requirements for debt collection and subscription services.  The new laws apply to subscription services, consumer warranties, money transfer services, and debt collection and settlement services, among others.

THE PANEL WON’T BUDGE: Eleventh Circuit Panel Reaffirms Hunstein Post-Ramirez Over Fierce Dissent– Pages-Long Footnotes Required to Defend Position

Setting the stage, the Eleventh Circuit issued one of the biggest FDCPA cases in history earlier this year, holding that supplying debtor information to a mail vendor violated the FDCPA prohibitions on “communicating” information about a debt to third parties.

CFPB Names New Chiefs for Supervision and Enforcement Positions

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) today announced leadership changes within the Bureau. The positions being announced today are: Assistant Director for the Office of Supervision Policy and Assistant Director for the Office of Enforcement. The CFPB supervises banks and credit unions with more than $10 billion in assets, as well as many nonbank firms in markets such as credit reporting, debt collection, and mortgages. Through supervision and enforcement actions, the CFPB has returned billions of dollars to consumers and holds companies accountable for their illegal conduct.

FTC to Ramp up Enforcement against Illegal Dark Patterns that Trick or Trap Consumers into Subscriptions

The Federal Trade Commission issued a new enforcement policy statement warning companies against deploying illegal dark patterns that trick or trap consumers into subscription services. The agency is ramping up its enforcement in response to a rising number of complaints about the financial harms caused by deceptive sign up tactics, including unauthorized charges or ongoing billing that is impossible cancel.

FDIC exploring the possibility of letting banks hold crypto

On Tuesday, the Chairperson of the US Federal Deposit Insurance Corporation, Jelena McWilliams, said that the agency is on the path of establishing clear guidelines for the interaction between crypto and banking activity in the US. Addressing attendees of the Money 20/20 conference held in Las Vegas, she explained that her regulatory role in crypto requires her to establish the necessary rules to help innovation thrive and establish the necessary checks to alleviate associated risks.

Post-Barr, Sixth Circuit Says Debt Collectors Can Be Liable

Continuing the fallout from the now over-one-year-old decision in Barr v. American Association of Political Consultants, Inc., the U.S. Court of Appeals, Sixth Circuit ruled that the U.S. Constitution displaced the government-backed debt exception from the start, overturning the lower court and leaving government debt collectors open to liability under the automated calling restrictions of the Telephone Consumer Protection Act (TCPA) for calls made between November 2015 and July 2020.

Remitter Completes Acquisition of US Receivables Leader Mercantile Adjustment Bureau

PHOENIX, Oct. 28, 2021 /PRNewswire/ -- Digital Bill payment platform Remitter has finalized its purchase of Mercantile Adjustment Bureau following a successful pre-IPO USD $12m cap raise led by Canaccord Genuity. The raise was also backed by Allium Capital and Casey Capital.

U.S. regulators exploring how banks could hold crypto assets – FDIC chairman

LAS VEGAS, Oct 26 (Reuters) - A top U.S. bank regulator said U.S. officials are looking to provide a clearer path for banks and their clients that are looking to hold cryptocurrencies, in order to keep control over the fast-developing asset.

Mortgage lenders prematurely raise government-backed loan limits, increasing loan amounts for homebuyers

Every November, the Federal Housing Finance Agency (FHFA) sets new conforming loan limits for the year ahead, giving the loan amount limits at which homebuyers can get conventional loan financing. But this year, many lenders are jumping the gun, raising their limits early before the FHFA makes its announcement. 

Outlook on the Peer to Peer Lending Global Market to 2026 – by Loan Type, Business Model, End-user and Region

DUBLIN, Oct. 27, 2021 /PRNewswire/ -- The "Peer to Peer (P2P) Lending Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2021-2026" report has been added to ResearchAndMarkets.com's offering. The global peer to peer (P2P) lending market exhibited strong growth during 2015-2020. Looking forward, the market is expected to grow at a CAGR of around 31% during 2021-2026. Keeping in mind the uncertainties of COVID-19, the analyst is continuously tracking and evaluating the direct as well as the indirect influence of the pandemic on different end use sectors. These insights are included in the report as a major market contributor.

FTC and DOJ to Hold Virtual Public Workshop Exploring Competition in Labor Markets

The Federal Trade Commission and the Department of Justice Antitrust Division will host a virtual workshop on Dec. 6 and 7 to discuss efforts to promote competitive labor markets and worker mobility. 

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