Wrongful car seizures, breakdowns in credit report disputes among ‘highlights’ for 2nd half of ‘21

Wrongful car repossessions and breakdowns in credit report disputes are among the key findings in a report released Monday by the federal consumer financial protection agency on legal violations identified during supervisory examinations in the second half of 2021.

The Consumer Financial Protection Bureau (CFPB) said in its latest issue of “Supervisory Highlights” that its examinations of financial institutions and other entities, including debt collection and auto finance, found that some servicers were engaging in unfair acts or practices by repossessing vehicles, even after consumers took intentional actions to prevent repossessions.

“The timing of auto repossessions is commonly a surprise to consumers,” the agency said. “They often lose personal property when the vehicle is repossessed or are unable to hold on to their job due to the lack of transportation. They also incur other significant costs, including the expense of finding alternative transportation, fees related to repossession, and negative marks on their credit reports.”

The CFPB said examiners found in certain cases that auto servicers engaged in unfairly failing to obtain refunds for borrowers for add-on products that no longer provided a benefit. In other instances, the agency said, examiners found that auto servicers misled consumers about the amount of their final loan payments after their normal payments were deferred due to financial difficulties – largely because of the COVID-19 pandemic.

The agency also outlined in the “Supervisory Highlights” that some credit reporting firms failed to conduct “reasonable investigations” into disputed debts, despite requirements under the law. “Under the Fair Credit Reporting Act (FCRA), when a person disputes a debt on their credit report, the credit reporting companies must conduct a reasonable investigation into the accuracy of the information,” the agency said. “Examiners, however, have found that the credit reporting companies commonly fail to conduct these investigations in a timely manner, and they also fail to review and consider all the relevant evidence submitted by consumers.”

CFPB Supervisory Report Finds Unlawful Auto Repossessions, Breakdowns in Credit Report Disputes