Illegal car repossessions and credit report disputes plague consumers, report finds

Photo (c) Peter Cade - Getty Images

CFPB officials have released findings that provide details on recent consumer abuses

The Consumer Financial Protection Bureau (CFPB) has released its Supervisory Highlights report on legal violations that the agency identified during the second half of 2021. The report details key findings across consumer financial products and services.

“While most entities act in good faith to follow the law, CFPB examiners are identifying law violations that lead to real harm,” said CFPB Director Rohit Chopra. “We will continue to examine firms to proactively identify and mitigate harmful practices before they become widespread.”

Supervisory examinations are one way that the CFPB determines whether companies are complying with federal consumer financial laws.

Unfair vehicle repossessions

In its most recent report, the CFPB focused on alleged illegal practices in auto loan servicing and consumer credit reporting.

The agency said its investigators found that some auto loan servicers were engaging in unfair acts or practices by repossessing vehicles, even after consumers took intentional actions to prevent repossessions. According to the report, consumers were almost always taken by surprise when the tow truck arrived to repossess their car or truck.

When consumers lost vehicles to unfair repossessions, investigators found there were other negative effects. They sometimes incurred fees related to the repossession and almost always received negative marks on their credit reports.

Investigators traced many repossessions to what they called poor communication. In some cases, consumers were behind on their payments because the loan servicer misled them about the amount they owed after payments were suspended during the pandemic.

Credit reporting issues

Credit reporting companies are required to comply with several regulations to help ensure that their reporting is fair and accurate, but CFPB examiners say they found cases where that didn’t happen.

The Fair Credit Reporting Act specifies that when a person disputes a debt on their credit report, the credit reporting agency must conduct a “reasonable” investigation into the accuracy of the information. But the CFPB’s report highlights instances in which these investigations didn't take place in a timely manner, if they even occurred at all.

Agency officials expressed the concern that a disputed item on a consumer’s credit report has been used to coerce them into paying money they may not legally owe. In fact, when it comes to medical bills, federal law requires credit reporting agencies to ensure the information is accurate.

When CFPB examiners find problems negatively affecting consumers, they share their findings with companies to help them correct the situation. For more serious violations or when companies fail to correct violations, the CFPB opens investigations for potential enforcement actions.

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