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Auto Case Shows CFPB Will Fine Lenders for Not Protecting Borrowers

AUG 25, 2014 12:27pm ET
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The latest action against an auto lender underscores the CFPB's expectation that lenders will affirmatively act to protect customers throughout and after the consumption of the transaction.

In the instant case the CFPB fined a lender nearly $3 million as a result of flaws with its automated credit reporting system that was providing inaccurate information to credit bureaus regarding the balances, dates of delinquencies and number of delinquencies.

Although the inaccurate reports were the result of a problem with a computer vendor, the lender did nothing other than report the problem, while continuing to use the flawed system.

As a result the CFPB found the lender violated Dodd-Frank by misrepresenting to consumers that they would make accurate reports to credit bureaus.

This case clearly illustrates the point that if consumers are being harmed by something over which the lender has direct or is direct control, the lender has an affirmative obligation to prevent the harm.

Otherwise, lenders can be subjected to substantial fines and penalties by the CFPB for failing to act.

Comments (1)
Oh, like FNMA reporting approved short sales as Foreclosures and when this was pointed out to the credit reporting bureaus, they advised that the information was being mis-interperted by the FNMA system! How is a lender expected to fix or take action to protect the borrower against bad information being provided? On this action, lender worked 4 weeks to try and correct with no positive results from either reporting agnecy or FNMA!
Posted by Claude R | Monday, August 25 2014 at 5:21PM ET
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