In the News 06/09/2015

The Consumer Financial Protection Bureau (CFPB) recently conducted a study to measure consumers’ understanding of reverse mortgages. Like many financial options, advertisements and explanations for reverse mortgages found on TV, in print and online depict happy people that are using their extra money to live fuller lives. However, many people do not completely understand what a reverse mortgage is.

A reverse mortgage is a special loan that allows homeowners age 62 or older to borrow against the accrued equity of their homes. According to the CFPB, many people believe a reverse mortgage is a government benefit for senior citizens. However, a reverse mortgage loan must be paid back in full when the borrower dies, moves or no longer lives in their home.

The CFPB study looked at multiple ads and platforms and found that most have incomplete or inaccurate information to describe the loans and that most of the important loan requirements were buried in the fine print, leaving borrowers with the false impression that reverse mortgage loans are risk-free.

Many participants involved with the study did not know that reverse mortgages had to be repaid, that they had attached interest or that they could lose their homes if they did not satisfy the loan requirements.

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In the News 03/24/2015

A furniture and electronics retailer based in Virginia will be required to pay more than $2.5 million in restitution and $10,000 in civil penalties for illegal debt collection practices according to the Consumer Financial Protection Bureau.

Freedom Stores, Inc., Freedom Acceptance Corporation and Military Credit Services, LLC has been accused of filing illegal lawsuits, making unauthorized withdraws from consumer accounts and contacting service members’ commanding officers.

Many of the consumers who were in debt with these companies had parents, significant others or third parties that authorized a one-time payment on their behalf. The withdrawals became illegal when the companies kept that payment information in their systems and took funds from those accounts without authorization or notification (sometimes years later).

Between July 2011 and December 213, Freedom Acceptance Corporation and Military Credit Services filed more than 3,500 lawsuits in Norfolk, Virginia against consumers who had not signed their financing contracts in Virginia and did not live there when the suits were filed. Nearly all of the suits filed resulted in default judgment and the companies garnishing the consumers’ wages. Many of the consumers did not even know they had been sued until their bank funds had been depleted.

The company currently has 14 store locations across the country. Freedom Stores has agreed to compensate its customers and forgive more than $2 million in loans. The company is subject to continued monitoring by the CFPB.

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In the News

Consumer protection

The Consumer Financial Protection Bureau (CFPB) is a government-created agency that was created in 2011 and has since been working to regulate and enforce consumer financial protection laws. This agency has taken on major industries, such as credit card companies, mortgage, real estate settlements, debt collection and now—telecommunication.

The CFPB has recently filed an action against Sprint, which has many asking whether this bureau will now be extending its reach into other types of industries. While previously relevant industries sold “consumer financial products and service,” telecom companies simply charge consumers for services. Read more here:

What are your thoughts? Are the parameters of this action within the intent of the Dodd-Frank Act?

CFPB— David versus Goliath

I had this friend that had a summer job as a teenager— he and a buddy pressure-washed siding on apartment buildings.

Whenever the supervisor would come around, the duo acted like they didn’t understand how to do the job very well.  The super would get frustrated, grab the washer and show them how it was done – for about ten full minutes!

What luck!  It was an excellent break!

Normally, nobody likes the boss looking over their shoulder.  They might get caught doing something the wrong way.

But what if you figure out how to use the boss to your advantage like my friend did?

The Consumer Financial Protection Bureau (CFPB) is a government created agency with the power to oversee, audit and even punish banking and collection agencies.


If the CFPB finds that acts have been committed which it believes are harmful to consumers or even that the internal policies are not sufficient to protect consumers from unfair, deceptive and abusive acts or practices (commonly called UDAAP), then those institutions will be subject to swift and harsh fines.

If you are new to the industry, the CFPB can appear to be the giant yelling, “FEE FI FO FUM,” while the collection industry collectively scurries around finding places to hide.


Good question. It doesn’t really have to be that way.

Yes, it’s true that the CFPB has the authority to unilaterally decide which practices were UDAAP and what the fines for it would be for committing them.

But it’s also true that you can use the CFPB to your advantage, like the pressure-washing boss.

When the CFPB began auditing, it looked for findings in seven categories or seven different ‘modules’. And if you will forgive the brief praise of government work, the CFPB did a smart job of presenting these modules in a logical manner.

This is one of those times when the “super” is working for you, so use them to your advantage.  CFPB has provided guidelines so that you know your shop should have written, tested materials in each of these following modules:

Module 1:        Your business model and work flow, including vendors

Module 2:        Communications (all communications to consumers)

Module 3:        Information sharing to third parties

Module 4:        Consumer complaints and dispute resolutions

Module 5:        Payment processing

Module 6:        Equal Credit Opportunity Act compliance

Module 7:        Litigation practices and knowing your legal limitations

These guidelines give debt collection attorneys and agencies that lucky break to perform well.

I don’t know about you, but if the person coming in to test me was willing to show me the test ahead of time, I wouldn’t be too intimidated about that.  And perhaps the tester wouldn’t feel like that much of a giant after all.

Now how do we get the CFPD to audit those defense attorneys?!