CFPB Probe Finds Abuse in Auto and Payday Loans
America’s consumer watchdog says it’s uncovered deception and abuse in several consumer financial products. The Consumer Financial Protection Bureau (CFPB) released a report Wednesday (July 26) that found illegal tactics at work in the auto lending, medical debt and payday loan sectors. “Today’s report furthers our efforts to highlight conduct that violates federal law, including […]
The post CFPB Probe Finds Abuse in Auto and Payday Loans first appeared on PYMNTS.com.
America’s consumer watchdog says it’s uncovered deception and abuse in several consumer financial products.
The Consumer Financial Protection Bureau (CFPB) released a report Wednesday (July 26) that found illegal tactics at work in the auto lending, medical debt and payday loan sectors.
“Today’s report furthers our efforts to highlight conduct that violates federal law, including the prohibition on abusive practices in consumer financial services,” CFPB Director Rohit Chopra said in a news release. “The CFPB is also inspecting more financial data brokers engaged in consumer reporting, as well as nonbank entities using authorities that previously went unused.”
Among the findings were what the bureau called a “significant shift in the auto lending market,” with car prices spiking, leading to larger loan amounts, higher monthly payments, and more loan delinquencies, with consumers often misled by lenders about the quality of car for which they were eligible.
In other cases, lenders charged fraudulent interest on inflated loan balances, canceled automatic payments without proper notice and engaged in illegal collection practices after vehicles had been repossessed.
Recent reporting by PYMNTS shows the pressure American consumers are facing when it comes to car payments, at a time when as many as 15% of car buyers had a monthly payment of at least $1,000 in the closing quarter of 2022 — compared to 10.5% a year earlier.
Bank earnings from earlier this year showed delinquency rates on the rise, while repossessions are climbing as well.
“As the economy curves down, our industry curves up,” Ben Deese, vice president at North Carolina-based Home Detective, told Bloomberg News in April.
Meanwhile, the CFPB’s examination also uncovered “unfair and abusive acts” by payday lenders in their collection practices, the release said, as well as instances where debt collectors tried to collected “work-related medical debt after receiving sufficient information to render the debt uncollectible under state worker’s compensation law.”
Earlier this month, the CFPB held a hearing on medical debt and payment options, in a session dubbed “Inquiry into Costly Credit Cards and Loans Pushed on Patients for Health Care Costs.”
“Financial firms are partnering with healthcare players to push products that can drive patients deep into debt,” Chopra said at the time. “We are opening a public inquiry to better understand how these practices are affecting patients in our country.”
The post CFPB Probe Finds Abuse in Auto and Payday Loans first appeared on PYMNTS.com.