Consumer Law & Policy Blog

CFPB orders auto finance company to provide $44.1 million in relief for illegal debt collection tactics

The Consumer Financial Protection Bureau yesterday announced an enforcement action against an indirect auto finance company and its auto title lending subsidiary for pressuring borrowers using illegal debt collection tactics. The CFPB found that Westlake Services, LLC and Wilshire Consumer Credit, LLC deceived consumers by calling under false pretenses and using phony caller ID information, falsely threatened to refer borrowers for investigation or criminal prosecution, and illegally disclosed information about debts to borrowers’ employers, friends, and family. The Bureau ordered the companies to overhaul their debt collection practices and to provide consumers $44.1 million in cash relief and balance reductions. The companies will also pay a civil penalty of $4.25 million.

The CFPB's full press release is here.

The consent order with the companies is here.

Experian data breach affects 15 million T-Mobile records

Over two years, a hack of Experian apparently acquired the records of 15 million T-Mobile customers and people who had applied for credit. Experian, the vendor that processes T-Mobile's credit applications.

T-Mobile's CEO posted a letter on the company's website to explain:

We have been notified by Experian, a vendor that processes our credit applications, that they have experienced a data breach. The investigation is ongoing, but what we know right now is that the hacker acquired the records of approximately 15 million people, including new applicants requiring a credit check for service or device financing from September 1, 2013 through September 16, 2015. These records include information such as name, address and birthdate as well as encrypted fields with Social Security number and ID number (such as driver’s license or passport number), and additional information used in T-Mobile’s own credit assessment. Experian has determined that this encryption may have been compromised. We are working with Experian to take protective steps for all of these consumers as quickly as possible.

"With Consumer Lenders Under Regulatory Glare, Big Banks Tighten Purse Strings"

The New York Times reports:

Consumer lending firms that focus on borrowers with weak credit have done surprisingly well in the last few years. Many survived the financial crisis of 2008, the Great Recession, and even went on to post strong profits in the face of an onslaught of new regulations. Now, though, these lenders face pressure from an unlikely source: the big Wall Street banks that have long provided the financial underpinnings for their operations.

The large banks lend money to the consumer finance firms, which use it to make high-interest loans to individuals. But recently some banks have begun tightening the terms of the financing in a way that could have far-reaching implications for the consumer finance industry.

The banks apparently tightened their terms as a response to the increase in regulation of the consumer lending industry. The new language was introduced as the Consumer Financial Protection Bureau, a federal agency set up after the financial crisis to police consumer lending, has been stepping up its oversight of consumer lenders.

The full article is here.

"Study: Payday lenders fill GOP coffers"

The Hill reports:

Payday lenders contributed hundreds of thousands of dollars in campaign funds to nearly a dozen House Republicans over the last four years, according to the report from Allied Progress, a government accountability organization run by Democratic strategist Karl Frisch. 

The campaign contributions coincided with votes taken by many of these Republicans that benefited the payday lending industry, the report contends.

The full article is here.

A must-read investigative report on Better Business Bureau ratings

What does a Better Business Bureau rating mean? Not much, according to a expose from CNNMoney posted yesterday.

The article gives the following examples of businesses that sported an A+ rating on BBB:

A mortgage broker charged by federal regulators with discriminating against minority borrowers. A financial firm accused in an ongoing federal lawsuit of preying on seniors. A medical testing company that settled charges of paying kickbacks to doctors. And a vitamin maker that allegedly misled parents with claims that its supplements could treat symptoms of autism.

Although many consumers think of BBB as the go-to site for consumer information and complaints about businesses, CNNMoney portrays a very different type of site, in which the ratings and degree of scrutiny a business are not related to their performance: