The CFPB has released its Summer, 2024 Supervisory Highlights, covering issues ranging from student loan servicing to financial institution supervision of medical providers offering payment products. The report covers the period from April 1, 2023 to December 31, 2023.

Here are key findings from the report:

  • CFPB examiners reported finding several instances of unfair, deceptive or abusive practices at companies servicing auto loans. Examiners found that auto loan servicers mishandled consumers’ final loan payments by not informing borrowers that they were required to pay their final payments manually even if they were enrolled in auto pay programs. The servicers then charged borrowers late fees for failing to make their final loan payment on time. In response, servicers said they are revising their procedures to either include the final payment in auto pay or inform borrowers when a payment must be made manually.
  • The CFPB reported that certain student loan servicers likewise engaged in practices that the CFPB has previously deemed to be unfair, deceptive or abusive and also identified a violation with respect to the servicing of preauthorized electronic fund transfers. Servicers created “excessive” barriers to assistance, provided inaccurate benefit forms and failed to notify consumers about funds transfers. Examiners reported significant problems with phone hold times, understaffed call centers and problems with interactive voice response systems. Some consumers were unable to gain access to online account management systems. Servicers also provided inaccurate information about the forms borrowers were required to file to qualify for loan programs with certain benefits such as forbearance, according to the bureau. The servicers also failed to follow requirements about notifying borrowers in advance when their preauthorized electronic funds transfers were larger than prior transfers. In response, servicers said they were developing plans to reduce drop rates and hold times.
  • Examinations of debt collectors revealed violations of the Fair Debt Collection Practices Act and violations of other consumer protection laws, the CFPB said. Examiners found that debt collectors failed to provide validation notices within five days of their initial contact with borrowers. In addition, the CFPB said that some student loan debt collectors concealed their true company names in communications with borrowers. Examiners also reported that debt collectors contacted borrowers at inconvenient or unusual places and at times used aggressive or abusive language.  Examiners found that debt collectors communicated or attempted to communicate with consumers through a medium of communication, such as a text message and/or through a specific telephone number that the consumers had requested the debt collectors not use to communicate with the consumers.  In the case of credit card collections, examiners found that certain credit card issuers committed unfair acts or practices when, with respect to receivables that were sold to debt collectors, they erroneously determined the applicable statutes of limitations in one particular state to be 10 years rather than 5 years. In response, debt collectors said they will update their call scripts and written communications to provide the disclosures that are required. They also said they have improved training and monitoring and that they are enhancing training to ensure that consumers are not contacted at inconvenient or unusual places and times.
  • Examiners identified a significant number of consumer complaints about how healthcare providers promoted and sold medical credit cards to consumers. Patients said they felt misled and pressured to open a credit card account. The CFPB said its examiners will continue to assess financial services company oversight of medical providers and will be reviewing marketing material and incentives offered to enroll patients. “Supervision expects supervised entities to have effective processes for managing the risks of service provider relationships, including relationships with medical providers who directly communicate with consumers about medical payment products,” the CFPB said. 
  • The CFPB said that in reviewing deposits and prepaid account practices, examiners have focused on practices that prevent consumers from accessing their funds and account information. Agency officials said that some financial institutions failed to inform consumers that their accounts had been frozen because fraud or other suspicious activity was suspected.   Responding to the CFPB, financial institutions said they planned to improve their processes to provide consumers with automatic notice of account freezes and ways that consumers can un-freeze their accounts. They also changed their procedures to allow consumers to speak directly with customer service representatives to challenge account freezes.
  • CFPB supervisors also examined institutions holding allotment savings accounts for servicemembers and other federal employees. Because military  and federal payroll deductions are one way that companies can collect first-in-line payments for expensive items, such as insurance or rent, the CFPB expressed concern that, in some cases, servicemembers and other federal employees may have had accounts opened or kept open without their knowledge, resulting in excess fees or other harm. In that regard, the Bureau said that in recent exam work, agency officials found that institutions did not send periodic statements to consumers with dormant allotment accounts for extended periods of time during which they charged fees on thousands of dormant accounts. In response to examiners’ reports, the institutions corrected system issues and committed to remediating servicemembers and federal employees.

 In summing up the report, CFPB Director Rohit Chopra said, “Loan servicers and debt collectors harm borrowers when they fail to provide required information, create barriers to customer assistance, or harass people about their debts. The CFPB is working to ensure servicers, debt collectors, and other financial service providers follow the law to protect consumers.”