Tag Archives: CFPB
CFPB May Let You Sue Your Bank Instead Of Going To Arbitration
“Consumers should not be asked to sign away their legal rights when they open a bank account or credit card,” CFPB Director Richard Cordray said. “Companies are using the arbitration clause as a free pass to sidestep the courts … ” In a first step toward potential new rules, the CFPB is publishing an outline of proposals under consideration in preparation for forming a small business review panel to gather feedback from industry stakeholders. … [New rules would apply to] credit cards, checking and deposit accounts, prepaid cards, money transfer services and several types of loans. Read More ›
CFPB To Consider Rules That Would Revoke Banks’ “License To Steal”
by Chris Morran, Consumerist
Earlier this year, the Bureau released its first report on arbitration in the financial products sector. It found that while the clauses are incredibly prevalent — 92% of prepaid debit cards and 88% of cellphone contracts use them — most consumers are completely unaware if they are affected. According to the CFPB, of those Americans constrained by arbitration agreements, fewer than 7% understood that this meant they had given up their right to file a lawsuit. “Consumers should not be asked to sign away their legal rights when they open a bank account or credit card,” said CFPB Director Richard Cordray in statement. Read More ›
L.A.-Based Auto Lender Must Pay $48M In Fines, Refunds For Illegal Collections
by Ashlee Kieler, Consumerist
Westlake Services, which specializes in purchasing and servicing auto loans, including many subprime and near-subprime loans, purchased loans from auto dealers nationwide. Wilshire Consumer Credit, a wholly owned subsidiary of Westlake, offers auto title loans directly to consumers, largely via the Internet, and services those loans. … In addition to deceiving consumers with illegal debt collection practices, the CFPB found Westlake and Wilshire violated consumer financial protection laws with advertising, customer relations and account servicing. Read More ›
Citibank Must Pay $700M Over Illegal Marketing, Collection Practices
by Ashlee Kieler, Consumerist
In all, the [Consumer Financial Protection Bureau] estimates seven million consumer accounts were affected by Citibank’s deceptive marketing, billing, and administration of debt protection and credit monitoring add-on products. … In addition to consumer relief, Citibank must pay a $35 million penalty to the CFPB’s Civil Penalty Fund, as well as end its unfair billing practices and cease engaging in the deceptive marketing of add-on products. … The CFPB contends Citibank and its subsidiaries relied on illegal billing practices, ultimately affecting nearly 2.2 million customer accounts … Read More ›
Consumer Groups Urge CFPB To Provide Better Oversight, Rules Over Student Loan Servicing
by Ashlee Kieler, Consumerist
A 2013 report from Consumers Union included anecdotal claims of servicer incompetence, like the borrower who was being charged more than twice the interest rate he was supposed to pay. More recently, the CFPB found that some student loan servicers took part in several illegal and shady practices. … Student loan servicing stands today where mortgage servicing stood over a decade ago: critically important and largely ignored. Read More ›
Verizon And Sprint To Pay $158 Million To Settle Mobile Cramming Case
by Jim Puzzanghera, Los Angeles Times
Verizon Communications Inc. and Sprint Corp. have agreed to pay a combined $158 million, including at least $120 million in consumer refunds, to settle federal and state investigations into allegations mobile customers were improperly billed for premium text messages. The so-called cramming of unauthorized charges onto customers’ bills involved one-time fees of 99 cents to $4.99 for third-party text-messaging services and monthly subscriptions to those messages that cost $9.99 to $14 a month, federal regulators said Tuesday. Customers complained that they never authorized the charges, according to the Federal Communications Commission. Read More ›
Payday Loan Rules Proposed by Consumer Protection Agency
by Michael D. Shear and Jessica Silver-Greenberg, The New York Times
Even supporters of the consumer bureau’s mission were critical on Thursday, saying that the proposed payday lending rules do not go far enough. A chorus of consumer groups said that loopholes in the proposal could still leave millions of Americans vulnerable to the expensive loans. … An analysis of 15 million payday loans by the consumer bureau … found that few people who have tapped short-term loans can repay them. Borrowers took out a median of 10 loans during a 12-month span, the bureau said. More than 80 percent of loans were rolled over or renewed within a two-week period. Read More ›
Credit Card Issuers Shouldn’t Bully Customers Into Arbitration Clauses
by David Lazarus, Los Angeles Times
[The Consumer Financial Protection Bureau] study found that as many as 80 million U.S. credit card customers are subject to arbitration clauses. The study showed that arbitration is much better for businesses than for consumers. Only 20% of cases resolved in consumers’ favor from 2010 to 2011 resulted in relief being paid, according to the study, while 93% of cases resolved in favor of companies led to payments. More strikingly, the study found that when consumers prevailed in arbitration, they were awarded an average of 57 cents for every dollar claimed. But when companies prevailed, they received 98 cents on the dollar. Read More ›
Binding Arbitration Rules Get Consumer Protection Bureau Scrutiny
by Ann Carrns, New York Times
Customers who have disputes with banks or credit card companies often can be forced to go to arbitration before a private lawyer to try to resolve the problem, rather than before a judge in court. That’s because many financial accounts come with built-in contracts containing “pre-dispute” arbitration clauses — so-called because consumers agree to them when they sign up for the account, before they actually have a disagreement. Read More ›
Corinthian Students To Get $480 Million Relief From ‘Predatory’ Loans
by Chris Kirkham, Los Angeles Times
As many as 170,000 students who took out private loans offered by Corinthian will see an immediate 40% reduction in their balances — about $1,880 on average — with additional reductions likely in the future. All students will see a 20% tuition reduction. And those enrolled in poor-performing programs can seek a full refund or transfer into another program. … Corinthian has been on a downward spiral since last summer, when the U.S. Department of Education restricted its access to federal student aid amid concerns that the company had falsified student job placement data. Read More ›
CFPB Lawsuit: Sprint Made Millions Off Consumers Acting As A “Breeding Ground” For Bill-Cramming
by Ashlee Kieler, Consumerist
The CFPB reports that most affected Sprint customers were initially targeted by the third-party products online. “Consumers clicked on ads that brought them to websites asking them to enter their cellphone numbers,” officials with the CFPB say in a news release. “Some merchants tricked consumers into providing their cellphone numbers to receive ‘free’ digital content and then charged for it. Many others simply placed fabricated charges on bills without delivering any goods or communicating with consumers.” Read More ›
CFPB: College Credit Card Agreements On Decline; Debit, Prepaid Card Agreements Increase
by Ashlee Kieler, Consumerist
Now, instead of signing onto agreements for the more regulated credit cards, [banking institutions and colleges] are focusing on debit and prepaid cards, which generally have fewer consumer protections. In fact, a report from the Government Accountability Office earlier this year found there were at least 852 schools that had agreements with companies to market debit or prepaid cards to students in 2013. Read More ›
CFPB Stretches Bank Rules to Cover Prepaid Cards, Mobile Payments
by Sheryl Harris, The Plain Dealer (Cleveland, Ohio)
“Many of these prepaid consumers are living paycheck to paycheck, and are engaged in a constant battle to make ends meet,” said CFPB Director Richard Cordray in remarks prepared for a field hearing Thursday. “They are some of the most economically vulnerable among us, and most of them have no idea that the prepaid cards they choose to purchase are largely unregulated.” … Many prepaid card issuers broadened consumer protections and trimmed fees as they came under increased scrutiny from the bureau. Read More ›