The recently named acting director of the federal consumer financial protection agency said in a statement released Thursday that the bureau will be taking “aggressive action” in response to cases where financial providers have violated COVID-19-related consumer protections.
Making public a statement he provided to staff last week, the CFPB acting director included COVID-19 relief for consumers as one of two priorities he has for the bureau; the other is racial equity.
Dave Uejio, named by President Joe Biden as acting director of the Consumer Financial Protection Bureau (CFPB), said he has asked the bureau’s supervision office to expedite enforcement investigations relating to COVID-19 “so that we can take action now to ensure that industry gets the message that violations of law during this time of need will not be tolerated.”
Referring to a special supervisory highlights report issued last week, Uejio noted examples of the types of violations that were uncovered in a series of “prioritized assessments” – those receiving higher-level inquiries, in response to the pandemic, than traditional examinations – in 2020:
- Mortgage servicers gave consumers incomplete and inaccurate information about CARES Act forbearances, failed to process forbearance requests, and collected and assessed late fees despite having approved forbearances.
- Servicers withdrew money even though consumers were in deferment.
- One student loan servicer denied thousands of forbearance extensions because the loan holder never responded.
- Companies across markets misreported accounts to credit bureaus and violated CARES Act amendments that added protections to the Fair Credit Reporting Act.
- Some banks set off stimulus payments and unemployment insurance benefits in order to cover bank fees and other debts.
- Examiners found that the widely used policy of banks only taking PPP applications from pre-existing customers may have a disproportionate negative impact on minority-owned businesses.
“These are just a few examples that show the types of harms consumers are suffering and the meaningful impact that strong oversight could have on the country’s recovery effort,” Uejio staetd. “Moving forward, the CFPB will take aggressive action to ensure that regulated companies follow the law and meet their obligations to assist consumers during the COVID-19 pandemic.”
Uejio said he has directed the bureau’s division of supervision, enforcement and fair lending (SEFL) to “determine the full scope of issues found in its exams, systemically remediate all of those who are harmed, and change policies, procedures, and practices to address the root causes of harms.” He also said he wanted that office to do the same for the “prioritized assessments” that did not already address that, but without conducting new follow-up exams.
“Companies that have not already received instructions from our examiners should expect to receive letters in the mail soon,” he stated.
The CFPB’s response to the above-noted harms could require penalties, he noted.
Addressing racial equity, Uejio said he will “elevate and expand existing investigations and exams and add new ones to ensure we have a healthy docket intended to address racial equity.” Uejio said this means fair lending enforcement is a top priority and will be emphasized accordingly, but he said the bureau will look beyond fair lending in order to “identify and root out unlawful conduct that disproportionately impacts communities of color and other vulnerable populations.”
Supervisory Highlights COVID-19 Prioritized Assessments Special Edition