All in UDAAP

CFPB Highlights UDAAP Violations in Mortgage Servicing

Adam Witmer
Regulatory Update, UDAAP

On April 24, 2024, the CFPB issued its Supervisory Highlights Spring 2024 edition which covered select examinations regarding mortgage servicing that were completed from April 1, 2023 through December 31, 2023. Examiners found that mortgage servicers engaged in UDAAPs and regulatory violations while processing payments by overcharging certain fees, failing to adequately describe fees in periodic statements, and not making timely escrow account disbursements.

VIDEO: Unfair Statement Fees

VIDEO: Unfair Statement Fees

Adam Witmer
UDAAP

In this Compliance Clip (video), Adam discusses how financial institutions can avoid a potential unfair act or practice when it comes to assessing statement fees and returned statement fees. Adam explains how this practice can result to a risk of UDAAP violation and shares some steps on how to make sure your financial institution is doing it right. A transcript of this video is now available.

CFPB Fines Toyota Motor Credit for Illegal Lending and Credit Reporting Misconduct

Adam Witmer
Regulatory Update, UDAAP

On November 20, 2023, the CFPB ordered Toyota Motor Credit Corporation to pay $60 million in consumer redress and penalties for operating an illegal scheme to prevent borrowers from cancelling product bundles that increased their monthly car loan payments. The CFPB alleges that the company withheld refunds or refunded incorrect amounts on the bundled products and knowingly tarnished consumers’ credit reports with false information.

CFPB Fines Enova For Repeat Violations

Adam Witmer
Regulatory Update, UDAAP

On November 15, 2023, the CFPB ordered online lender Enova International Inc. to pay a $15 million penalty for widespread illegal conduct including withdrawing funds from customers’ bank accounts without their permission, making deceptive statements about loans, and cancelling loan extensions. In 2019, Enova paid a $3.2 million penalty to the CFPB and was ordered to cease its illegal conduct.

CFPB Takes Action Against Chime (Sendwave) for Deceptive Practices

Adam Witmer
Regulatory Update, UDAAP, Regulation E

On October 17, 2023, the CFPB took action against Chime Inc. for deceiving consumers about the speed and cost of remittance transfers through its mobile app, Sendwave. According to the CFPB’s press release, Chime also illegally forced consumers to waive their legal rights, failed to provide consumers with legally required disclosures and receipts, and failed to properly investigate consumer disputes and errors.

Court Rules CFPB 2022 Update on Exam Manual for UDAAP Invalid

Adam Witmer
Regulatory Update, UDAAP

On September 8, 2023, the United States District Court for the Eastern District of Texas issued a summary judgment vacating the CFPB’s March 2022 update to the UDAAP Chapter of the CFPB’s Supervision and Examination Manual - for members of the plaintiffs. This is after the plaintiffs - the ABA, the Texas Bankers Association, the U.S. Chamber of Commerce and several others - challenged the CFPB’s March 2022 interpretation in its Consumer Compliance Examination Manual of its authority to include discrimination as an unfair act or practice under its Consumer Financial Protection Act (CFPA) UDAAP authority. This ruling applies to members of the plaintiffs.

CFPB Fines Bank of America for Multiple Violations

Adam Witmer
Regulatory Update, UDAAP, Regulation Z

On July 11, 2023, the CFPB ordered Bank of America to pay more than $100 million to customers for systematically double-dipping on fees imposed on customers with insufficient funds in their account, withholding reward bonuses explicitly promised to credit card customers, and misappropriating sensitive personal information to open accounts without customer knowledge or authorization. Bank of America will pay a total of $90 million in penalties to the CFPB and $60 million in penalties to the OCC, which also found that the bank’s double-dipping on fees was illegal.

CFPB Fines OneMain for Deceptive Sales Practices

Adam Witmer
Regulatory Update, UDAAP

On May 31, 2023, the CFPB has ordered installment lender OneMain Financial to pay $20 million in redress and penalties for failing to refund interest charged to 25,000 customers who cancelled purchases within a purported “full refund period,” and for deceiving borrowers about needing to purchase add-on products to receive a loan. According to the CFPB, OneMain pushed its employees to hit sales targets and illegally withheld funds.

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