CFPB releases 2020 consumer complaint report, new blog on payday rule
The CFPB Wednesday released its Consumer Response Annual Report for 2020, which revealed the bureau handled 54 percent more consumer complaints last year than in 2019. In addition, CFPB Acting Director Dave Uejio posted a new blog this week focused on the bureau's small dollar lending rule.
Consumer complaints report
The consumer complaints report flagged that the bureau handled roughly 542,300 complaints in 2020 and starting in April, more than 3,000 complaints were submitted each month containing coronavirus keywords. While coronavirus-explicit mentions only made up about 6 percent of the total complaints, the bureau acknowledged that more were likely related to the financial impact of the pandemic.
The top issues reported by consumers in 2020 included:
- credit and consumer reporting (58 percent);
- debt collection (15 percent);
- credit card (7 percent);
- checking or savings (6 percent); and
- mortgage complaints (5 percent).
As complaints for inaccurate information on credit and consumer reports continue to rise each year, the bureau said it will release a separate report later this year on the issue.
Access the full report here. NAFCU will also provide an analysis of key issues for credit unions to be aware of in an upcoming Compliance Blog post.
Payday lending rule update
In the blog on the payday lending rule, Uejio gave an update on a brief filed by the bureau in a lawsuit challenging the changes to the 2017 payday lending rule – finalized last year – that rescinded mandatory underwriting requirements, including ability-to-repay (ATR) provisions.
Uejio said the brief does not address the bureau's position on the merits of the rule nor indicate its satisfaction with the status quo in the small dollar lending market.
"To the contrary, the Bureau believes that the harms identified by the 2017 rule still exist, and will use the authority provided by Congress to address these harms, including through vigorous market monitoring, supervision, enforcement, and, if appropriate, rulemaking," Uejio wrote. He added that ATR "is an important underwriting standard" and the bureau will address practices that rely on consumers' inability to afford repayment.
Rohit Chopra is awaiting Senate confirmation to lead the bureau. In his nomination hearing with the Senate Banking Committee earlier this month, Chopra acknowledged the importance of short-term, small-dollar loans offered by financial institutions, explicitly mentioning credit unions' products.
NAFCU supported removing the mandatory underwriting requirements in order to provide consumers and lenders with flexibility in underwriting and loan options to meet their needs. The association recommended the CFPB tailor regulations to protect consumers against the egregious practices of traditional, high-cost payday lenders in the marketplace, while also encouraging responsible lenders to offer short-term, small-dollar loans.
NAFCU had also called for an expansion of the payday lending rule's safe harbor as it only covers the first iteration of the NCUA's PALs program; the NCUA in 2019 approved adding a regulatory framework for an additional PALs program (PALs II) but the bureau did not expand the safe harbor to cover these loans.
NAFCU will continue to engage with the bureau as they consider changes that will impact credit unions' abilities to offer these types of loans.