Consumer reporting companies and data furnishers continued to violate the Fair Credit Reporting Act (FCRA) by failing to promptly address and update incorrect information on credit reports, according to a report issued Wednesday by the consumer financial protection agency.
The Supervisory Highlights report issued by the Consumer Financial Protection Bureau (CFPB) asserts that examiners for the agency found legal violations across consumer financial products and services in the first half of this year. The findings regarding the consumer reporting companies were among those contained in the report. The report also, according to the CFPB, highlights instances where mortgage servicers charged impermissible fees when homeowners went to make their mortgage payments.
On credit reporting, the agency said its examiners found that one or more of the nationwide consumer reporting companies failed to report to the CFPB the outcome of their reviews of complaints about inaccuracies on consumers’ credit reports. “In response to these findings, the consumer reporting companies changed their policies, procedures, and practices to be more transparent in handling such complaints,” the bureau said.
The agency said its examiners also found violations of the accuracy obligations of the FCRA by furnishers, including finding that auto loan furnishers were reporting inaccurate information about consumer loans despite knowing that the information was inaccurate. “In response to these findings, furnishers corrected the inaccurate information for affected consumers and made it easier for consumers to submit disputes directly to the furnishers,” CFPB said.
On mortgage servicing, the report alleged that examiners found servicers violated federal law by charging sizable phone payment fees – even though consumers were not made aware of the pay-by-phone penalties. “During calls with borrowers, customer service representatives did not disclose the existence or cost of fees for paying over the phone, yet the borrowers were charged fees anyway,” the agency said. “Following these findings, the CFPB required the servicers to reimburse all borrowers who paid phone payment fees when those fees were not properly disclosed.”
In auto lending, the agency said it unearthed legal violations related to add-on product charges, loan modifications, double billing, electronic devices that interfere with driving, and debt collection tactics. The agency termed the practices unfair and deceptive.
“In a number of examinations, examiners focused on junk fees,” the agency stated. “For example, examiners reviewed servicers’ handling of add-on product charges where individuals had paid the full amount for certain add-on products as a lump sum at loan origination and made payments on these add-on products throughout the loan term.”
The bureau stated that examiners identified instances where borrowers paid off their loans early, but servicers engaged in an unfair practice by failing to provide refunds for unearned fees related to the add-on products. “The borrowers were entitled to refunds of the related unearned fees because, upon early payoff, the loan and the add-on products terminated and no longer offered any possible benefit,” the CFPB said.