The CFPB published another round of Supervisory Highlights, and yet again auto finance finds itself in the crosshairs.. Not good folks, and what's really troubling is that there wasn't anything new or groundbreaking, all of the items listed have received attention in the past. There's lessons for originators and servicers alike in these Highlights, and the findings related to add-on products are especially blistering.
Since we've come to accept the fact that the vast majority of you won't read the Highlights for yourselves, we've decided to simplify things and just list the key headings in the write up because a short glance is all it takes to know where you need to look in your own operations:
Section 2.1 Origination Disclosures
2.1.1 Misleading "As Low As" APR Marketing
2.1.2 Inaccurate Disclosures about Prepayment Penalties
Section 2.2 Repossession Activities
2.2.1 Wrongful Repossession
2.2.2 Repossessing third parties vehicles without a recorded lien
Section 2.3 Servicing Practices
2.3.1 Improper Payment Allocation
2.3.2 Excessive Delay in Providing Title
Section 2.4 Add-On Products
2.4.1 Collecting and Retaining Amounts for Products Consumers Did
Not Agree to Purchase
2.4.2 Financing of Void Add-on Products on Salvage Vehicles
2.4.3 Failure to Identify Payee of Add-on Products
2.4.4 Onerous Requirements to Cancel Add-On Products
2.4.5 Failure to Honor Contractual Cancellation Rights
2.4.6 Failure to Ensure Refunds of Unearned Premiums
2.4.7 Inaccurate Add-on Product Refund Amounts
2.4.8 Delays in Applying Add-on Product Refunds
2.4.9 Continuing to Collect Payments when Consumers are Covered by a GAP Product and Miscalculating Refunds
Section 2.5 Furnishing Deficiencies
2.5.1 Reporting Information with Actual Knowledge of Errors
2.5.2 Failure to Promptly Update or Correct Inaccurate Information
This Week's Tip of the Week is to pay attention to the subjects addressed in these Highlights and determine whether you are guilty of some of these same practices. While most of you won't be unlucky enough to face direct scrutiny from the Bureau, state regulators and plaintiffs' lawyers have demonstrated in the past that they will focus on the behaviors targeted by the CFPB and our audience is much more likely to have to deal with them.
If you don't know what to do next, let us help you. Simply email us at info@IgniteCP.com and let's set up a meeting to discuss your own practices. Don't become another tragic tale. Keep Calm & Call Ignite
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