{"id":24032,"date":"2022-07-27T02:48:39","date_gmt":"2022-07-27T02:48:39","guid":{"rendered":"https:\/\/curepossession.com\/?page_id=24032"},"modified":"2022-07-27T06:20:12","modified_gmt":"2022-07-27T06:20:12","slug":"cfpb-how-is-this-not-an-udaap","status":"publish","type":"page","link":"https:\/\/curepossession.com\/cfpb-how-is-this-not-an-udaap\/","title":{"rendered":"CFPB; How is this not an UDAAP?"},"content":{"rendered":"

\"Hey<\/em><\/strong><\/span><\/h3>\n

Lenders billing consumers for fees that vendors were never paid<\/em><\/strong><\/span><\/h3>\n

EDITORIAL<\/strong><\/span><\/p>\n

Consumer Financial Protection. It\u2019s the first three words in the bureaus name. It would seem completely obvious that a lender would be committing consumers wrong by charging them fees that weren\u2019t actually owed. So why is the CFPB ignoring the flagrant Unfair, Deceptive and Abusive Practice (UDAAP) being perpetrated on the American consumer?<\/span><\/p>\n

Hypocrisy<\/strong><\/span><\/h3>\n

Hardly a week goes by that I don\u2019t hear an agency owner complaining about tens of thousands of dollars in unpaid repossession fees by the national repo forwarding companies. Some are far worse than others, but the problem is persistent and is often justified by contract clauses prohibiting payment of invoices older than 30 days old or less. Invoices that the forwarders claim they never received however persistent the agency owners pester them for payment and continue to resubmit them to no avail.<\/span><\/p>\n

So, how did things get this bad? Well, it became well known back in October of 2017 when Consolidated Asset Recovery Systems announced their need to enforce punitive actions<\/a><\/span> against agents for failure to report repossessions within their service level agreements. The punishments included, compliance holds, suspensions and repossession fee forfeitures.<\/span><\/p>\n

\"\"This is a hypocritical situation in an industry whose primary objective is in the recovery of collateral resulting from unpaid debts. It\u2019s one that some in the forwarding industry seem to gleefully take advantage of while slapping happy face emojis\u2019 on notices of their intent to continue this practice on their agency networks.<\/span><\/p>\n

Deficient Legal Notices?<\/strong><\/span><\/h3>\n

What\u2019s worse, is that this practice goes on and the forwarders are being paid by the lenders. Lenders, who, as required by the Uniform Commercial Codes and relevant state laws such as California\u2019s Reese Levering Act, send the borrowers from whom were repossessed, letters of Notice of Intent to Sell Collateral (NOI).<\/span><\/p>\n

And after the vehicle is sold, they are provided a notice of deficiency balance. In this letter, it is represented in an itemization, all fees associated with the recovery and liquidation of the collateral.<\/span><\/p>\n

These are legal forms and very litigious ones at that. Forms that trigger class action lawsuits. A detail as small as whether certain fees must be paid directly to an agent or the lender listed on the NOI\u2019s garner settlements in the hundreds of thousands here in California. In litigation, little things mean a lot. And while this may seem to be a minor issue to most lenders that they feel no responsibility for, in court it could prove to be a serious and expensive headache.<\/span><\/p>\n

Unpaid Invoices<\/strong> \u00a0<\/strong><\/span><\/h3>\n

As an agency owner with unpaid invoices, I would be awfully tempted to chase down those borrowers whose cars you\u2019d repossessed and get my hands on some of those notices sent by the lenders. Notices that would clearly show the borrower being charged for the full repossession AND the forwarders fees all expressed as one item.<\/span><\/p>\n

I\u2019m a pretty fair judge of human nature, so I\u2019ll go out on a limb and make a guess. Those same borrowers, still stinging from the pain of repossession, would find it more than a little unfair and \"\"deceptive of the lender to charge them for a fee that the agency never got paid. And worse, a much higher bill than the one charged for the actual repossession.<\/span><\/p>\n

Afterall, did the forwarding company repossess the vehicle? No. And then why on God\u2019s green earth would the borrower be charged $450-$575 or more for a repossession that the agent only billed $350-$400 for?<\/span><\/p>\n

Deceptive? Oh yeah.<\/span><\/p>\n

Feeding Stray Cats\"\"<\/strong><\/span><\/h3>\n

If enough of these borrowers found this out, eventually, one will contact an attorney who specializes in repossession lawsuits. We all know that there\u2019s no shortage of them running around these days. The law of averages says that it would eventually be tried in a court of law, that is, unless every lender and the forwarders just settle their way out of court beforehand, as they are oft to do.<\/span><\/p>\n

And as the practice of feeding stray cats goes, so goes the nature of puppy mill lawsuits. Lawsuits that the attorneys know will pay out with no real labor beyond punching out cookie cutter letters and lawsuit filings with the courts.<\/span><\/p>\n

So as a lender, you\u2019re probably thinking; I paid the forwarder, so I\u2019m safe. What happens between them and the agent is none of my business. <\/em><\/span><\/p>\n

This brings up a legal question of is a lender shielded or insulated by their vendor relation with a forwarder for actions that they may or may not be aware of. I\u2019m no lawyer, but I\u2019d doubt it. Let\u2019s face it, when the lawsuits start, the summons and discovery document requests are flung around with the ease and generosity of an Oprah audience giveaway. Guilty or not, you\u2019re going for a ride and an expensive one at that.<\/span><\/p>\n

\"\"But I\u2019ll fight it!<\/em>, you think. No, you won\u2019t. You\u2019ll contact your bond carrier who will take over the whole matter. And as a common practice of cost benefit analysis, they\u2019ll cough up settlement money and you\u2019ll wipe away the entire debt and delete the entire credit history.<\/span><\/p>\n

As a lender, you know I\u2019m right and you\u2019ve probably done it many times already. Feeding stray cats (frivolous lawsuit attorneys) is a price of doing business that\u2019s hard to get around. The more you feed the stray cats, the more they keep coming back for more.<\/span><\/p>\n

Big Brother CFPB\"\"<\/strong><\/span><\/h3>\n

Now, for all of their crusades in the name of fairness and creating a level playing field to protect the public from the evils of the lenders in this world, the CFPB has been pretty absent in the realm of repossession forwarding and I\u2019ve been scratching my head on this for years.<\/span><\/p>\n

Like sharks smelling blood, if irregularities in reporting debts to consumers attracts their attention, there is a pretty good chance that they will move in. No, the plight of the repossession industry is not quite in their scope of importance enough to warrant their taking action. I know it\u2019s not because I know people who have advised them of this and still nothing has happened.<\/span><\/p>\n

The CFPB does have the authority to examine third party vendors, something they made a point of reminding everyone about on April 25th<\/sup><\/span><\/a> . Fact is, since its inception in 2010, the CFPB has had the authority to conduct rulemaking and supervise auto loan servicing.<\/span><\/p>\n

As recent as April 26th, the Consumer Financial Protection Bureau (CFPB) issued their Spring 2022 Supervisory Highlights<\/a><\/span> which listed at the top of their priorities Auto Servicing and Wrongful Repossessions. Repossession forwarding is auto servicing and subject to CFPB examination. Something they haven\u2019t been too involved in yet, but that doesn\u2019t mean it\u2019s not coming once repossession volume really picks up.<\/span><\/p>\n

Is it all an UDAAP?<\/strong><\/span><\/h3>\n

I am not a lawyer. This is not legal advice. This is just my observation and opinion. An opinion that needs to be measured by legal definitions and standards. Standards that the CFPB has already laid out.<\/span><\/p>\n

According to the CFPB<\/span><\/a>; The standard for unfairness in the Dodd-Frank Act is that an act or practice is unfair when:<\/em><\/strong><\/span><\/p>\n