Compliance Blog

Disclosures, Error Resolution Top CFPB Enforcement and Examination Findings

Last month, the CFPB released its annual report on Truth in Lending Act (TILA), Electronic Fund Transfer Act (EFTA) and Credit Card Accountability Responsibility and Disclosure Act (Credit CARD Act) administrative actions taken in 2016 and 2017. The report reviewed enforcement actions by various federal agencies and the most frequent examination findings across the agencies.

TILA

In 2016 and 2017, five federal agencies filed public enforcement actions for violations of TILA: CFPB, Federal Deposit Insurance Corporation (FDIC), Federal Trade Commission (FTC), Office of the Comptroller of the Currency (OCC) and Department of Transportation (DOT). NCUA did not file any public enforcement actions in 2016 or 2017. Here are the violations cited in the CFPB’s enforcement actions:

  • Stating an inaccurate APR in credit agreements or disclosures;
  • Failure to state a description of the finance charge and the APR in closed-end credit disclosures;
  • Understating the finance charge and APR in credit agreements;
  • Failure to provide required disclosures when a trigger term is stated in an advertisement;
  • Inadequate open-end credit account opening disclosures;
  • Failure to timely credit mortgage periodic payments; and
  • Failure to provide accurate mortgage periodic statements.

In addition to the public enforcement actions, the CFPB, FDIC, Federal Reserve Board (FRB) and NCUA took non-public supervisory or enforcement action against numerous financial institutions. All actions in 2016 resulted in reimbursements to approximately 57,889 consumers of $5.2 million by 34 institutions. All actions in 2017, resulted in reimbursements to approximately 9,334 consumers of $1.5 million by 41 institutions.

On the examination side, the report looked at the most common violations cited by all the FFIEC agencies. In 2016, the most common violation was failure to accurately disclose the finance charge, including a brief description such as “the dollar amount the credit will cost you” for closed-end credit (12 CFR § 1026.18(d)). In 2017, there were four common violations amongst the agencies:

  • Failure to accurately disclose the finance charge, including a brief description such as “the dollar amount the credit will cost you” for closed-end credit (12 CFR § 1026.18(d));
  • Failure to disclose good faith estimates for closed-end credit (12 CFR § 1026.19(e));
  • Failure to disclose the form title “Closing Disclosure” for mortgage transactions (12 CFR § 1026.38(a)); and
  • Failure to provide specific “Loan Costs” information on the closing disclosure for mortgage transactions (12 CFR § 1026.38(f)).

EFTA

In 2016 and 2017, three federal agencies filed public enforcement actions for violations of EFTA: CFPB, FDIC and FTC. NCUA did not file any public enforcement actions in 2016 or 2017. Here are the violations cited by the three agencies:

  • Failure to properly obtain consent for preauthorized electronic fund transfers;
  • Failure to provide required disclosures for preauthorized transfers;
  • Requiring preauthorized transfers to repay a loan as a condition of obtaining credit;
  • Failure to comply with the overdraft opt-in requirements; and
  • Charging fees that were not properly disclosed or agreed to.

The CFPB and NCUA also reported non-public supervisory or enforcement action against numerous financial institutions. All actions in 2016 resulted in reimbursements to approximately 164,677 consumers of $3.1 million by 10 institutions. All actions in 2017, resulted in reimbursements to approximately 1,156 consumers of $140,157 by 17 institutions.

On the examination side, the FFIEC agencies reported two common violations in 2016:

  • Failure to timely investigate and resolve errors (12 CFR § 1005.11(c)); and
  • Failure to follow the requirements when an error investigation reveals either no error or a different error occurred (12 CFR § 1005.11(d)).

In 2017, there were three common violations:

  • Failure to act on both oral and written notices of an error (12 CFR § 1005.11(b));
  • Failure to timely investigate and resolve errors (12 CFR § 1005.11(c)); and
  • Failure to provide remittance transfer disclosures (12 CFR § 1005.31(b)).

Credit CARD Act

In 2016 and 2017, three federal agencies filed public enforcement actions for violations of the Credit CARD Act: FDIC, FRB and OCC. NCUA did not file any public enforcement actions in 2016 or 2017. Here are the violations cited by the three agencies:

  • Charging fees for products cardholders never received;
  • Unfair and deceptive practices; and
  • Deceptive billing practices for balance transfers.

The CFPB, FDIC, FRB and OCC also reported non-public supervisory or enforcement action against numerous financial institutions. All actions in 2016 resulted in reimbursements to approximately 400,000 consumers of over $47 million. All actions in 2017, resulted in reimbursements to approximately 54,940 consumers of $12.7 million.

The report did not include information about common examination findings related to the Credit CARD Act.

About the Author

Jennifer Aguilar, NCCO, NCBSO, APRP, Senior Regulatory Compliance Counsel, NAFCU

Jennifer Aguilar, NCCO, Regulatory Compliance CounselJennifer Aguilar, NCCO, NCBSO, APRP joined NAFCU as regulatory compliance counsel in February 2017 and was named Senior Regulatory Compliance Counsel in March 2019. In this role, Aguilar helps credit unions with a variety of compliance issues.

Read full bio