CFPB: Auto Loan Servicers Must Ensure Lawful Repossessions – Finance and Banking

On February 28, the CFPB issued Bulletin 2022-4 regarding repossession of
vehicles, and the potential for violations of the Dodd-Frank
Act’s prohibition on engaging in unfair, deceptive, or abusive
acts or practices (UDAAPs) when repossessing vehicles. The CFPB has
promised to use all appropriate tools to hold auto lenders and
servicers accountable if they engage in UDAAPs in connection with
their activities. Based on recent examinations and enforcement
actions, the CFPB has observed the following activity in the auto
finance industry: illegally seizing cars, sloppy record keeping,
unreliable balance inquiries, and ransom for personal property.

To prevent UDAAPs, the CFPB notes that entities should, among
other things, consider doing the following:

1. Review policies and procedures, including call scripts, to
   ensure that they provide employees with accurate information about
   steps consumers can take to prevent repossession;




2. Monitor repossession service providers for compliance with
   repossession cancellations;




3. Review consumer contracts to validate that any fees charged to
   consumers are authorized under the terms of applicable contracts;
   and




4. Perform regular reviews of service providers, including
   repossession vendors, as to their pertinent practices.

Putting in Into Practice: This bulletin
represents the latest in a series of public warnings from the CFPB
that it is closely monitoring auto industry conduct, especially as
it relates to ensuring affordable credit, servicing and
collections, and fair competition (we recently discussed the
CFPB’s latest look at auto finance companies in a previous
Consumer Finance and FinTech blog post here).Auto finance companies should be mindful
of these warnings and consider taking action to implement some of
the best practices in this bulletin before becoming the subject of
a supervisory examination or an enforcement action.

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