Tag Archives: CFPB

Overdraft Practices Continue To Gut Bank Accounts And Haunt Customers

by Michael Corkery and Jessica Silver-Greenberg, New York Times

The nation’s big consumer banks collected about $11 billion in overdraft fees last year, which accounted for 8 percent of their profits, according to a report by the Consumer Financial Protection Bureau. … Many customers end up confused by how overdrafts work. In their marketing materials, for example, banks present the choice of whether to sign up for overdraft as an offer of “overdraft protection” — a feature many customers thought would automatically deny transactions and shield them from incurring the fees at all. In reality, it is a service authorizing the banks to charge the overdraft fees. Read More ›

Why Is The UC System Investing In A Payday Lender Accused Of Trapping Consumers In Perpetual Debt?

by David Lazarus, Los Angeles Times

The university has invested millions of dollars in an investment fund that owns one of the country’s largest payday lenders, ACE Cash Express. … [The CFPB] has found that only 15% of payday loan borrowers are able to repay their loans on time. The remaining 85% either default or have to take out new loans to cover their old loans. Because the typical two-week payday loan can cost $15 for every $100 borrowed, the bureau said; this translates to an annual percentage rate of almost 400%. Read More ›

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

Citibank sign in window

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

can of cram aka spam

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 ›