United States: CFPB Issues Its Spring 2014 Supervisory Highlights Report With A Focus On Nonbank Examination Findings

Last Updated: May 30 2014
Article by Allyson B. Baker

On May 22, 2014, the Consumer Financial Protection Bureau (CFPB or the Bureau) released its Spring 2014 Supervisory Highlights report, which addresses the agency's supervisory activities during the last six months (spanning November 2013-February 2014). The report focuses on the Bureau's nonbank supervisory efforts and in particular on its examination findings in three industries: consumer reporting agencies; debt collection; and short-term, small dollar lending (or payday lending).

The report also focuses on two more general regulatory concerns: the maintenance of adequate compliance management systems (CMS) and the importance of vendor management. Specifically, the report notes that adequate CMS have "four interdependent control components," which include management and oversight by the board of directors; a compliance program; a consumer complaint management program; and an independent compliance audit. Throughout the report, the Bureau also reiterates its expectation that all supervised entities will manage carefully their vendor relationships; the Bureau first addressed this issue in its Bulletin dated April 13, 2012.

Consumer Reporting Agencies (CRAs)

The Bureau started supervising consumer reporting agencies (CRAs) in September 2012 when its larger participant rulemaking for CRAs took effect. Subject to certain parameters, an entity is a larger participant of the credit reporting markets and, thus, subject to CFPB supervisory authority, if its "annual receipts from consumer reporting are more than $7 million." The report makes the following observations about CRAs that the Bureau recently examined:

  • "[S]ome CRAs had either no formal CMS or inadequate CMS."
  • Some CRAs lacked documented policies and procedures, including policies that address "dispute-handling obligations," which are mandated by Fair Credit Reporting Act.
  • "Several CRAs lacked policies and procedures to verify that service providers understood their responsibilities under Federal consumer financial law, that the employees of service providers were appropriately trained, and that service providers and their employees in fact complied with Federal consumer financial law."

Debt Collection

The CFPB began supervising debt collectors in January 2013 when its rule defining larger participants in the debt collection markets became effective. Subject to certain parameters, an entity is "a larger participant of the consumer debt collection market," and, thus, subject to the Bureau's supervisory authority, if that entity's annual receipts resulting from consumer debt collection are more than $10 million. The report makes the following observations about debt collectors that the Bureau recently examined and reminds debt collectors and creditors about certain requirements of the consumer financial laws:

  • Several debt collectors had "significant weaknesses in the[ir] CMS."
  • Some debt collection companies have violated Regulation E "by failing to secure a written authorization, either signed or similarly authenticated by the consumer, before initiating recurring electronic fund transfers from consumers' accounts."
  • "[T]he CFPB expects creditors and other debt sellers to employ adequate policies and procedures to ensure the accuracy of the data associated with any debts that they sell."
  • The Bureau also expects furnishers of information to CRAs to have a method for investigating disputes regarding the accuracy of consumer information that is reported to CRAs.
  • There are two critical aspects of compliance with the fair debt collections practice: 1) under the Fair Debt Collections Practices Act (FDCPA), collections phone calls can only be placed during "appropriate calling hours set forth in the FDCPA," and 2) that debt collection companies cannot make "false or misleading representations in connection with the collections of debt."

Short-Term, Small Dollar Lending (Payday Lending)

The Bureau started its payday lending supervision program in January 2012. Unlike entities in the credit reporting and debt collection markets, which are only subject to the Bureau's supervisory authority if they are larger participants in the marketplace as defined by rulemaking, the Dodd-Frank Act specifies that all payday lenders, regardless of size, are within the CFPB's supervisory jurisdiction. The report makes the following observations about payday lenders that the Bureau recently examined:

  • "[A] number of payday lenders have not implemented effective compliance management systems."
  • The Bureau found that many contracts between payday lenders and their vendors "contained no specific compliance-related expectations, and some did not include any reference at all to compliance responsibilities."
  • In several instances, "CFPB examiners also found inadequate compliance management systems for collection activity," including a failure of payday lenders to monitor collections calls, any "attempt to understand the root causes of complaints arising from collections practices," train their collectors, or oversee their third-party debt collectors.
  • "Supervision has cited multiple lenders for unfair, deceptive, or abusive acts or practices or risks of these acts or practices" in the collections arena and notes that lenders also "contacted references and improperly disclosed personal debt information" to locate or contact borrowers for collections purposes.
  • Also in the collections arena, multiple lenders had "false or misleading communications with borrowers," including making false threats to consumers that they would be subject to additional fees or non-existent legal actions or reported to CRAs.
  • "One or more lenders" engaged in a deceptive practice when they threatened consumers with "ACH transactions that were contrary to the agreement" executed between the lender and the consumer.
  • The Bureau generally observed that lenders need to mitigate fair lending risks by implementing a comprehensive CMS that adequately accounts for these risks.

The Bureau's report also emphasizes the importance of the Fair Credit Reporting Act and Regulation V requirements that furnishers of consumer information to CRAs have a method for conducting "a reasonable investigation" into those instances when a "consumer disputes the completeness or accuracy of information" provided to the CRA.

The report concludes with other general updates and observations: (1) noting that the Bureau's examination staff has grown to approximately 320 examiners; (2) reminding supervised entities to assess how social media affects their compliance with the consumer financial laws; and (3) stating that the Bureau anticipates larger participant rulemaking in the indirect nonbank auto lender markets.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.