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WBK Industry News - Federal Regulatory Developments

CFPB Issues Consent Order for Incorrect Consumer Information Sent to Credit Reporting Agencies

The CFPB has issued a Consent Order against a company who operates and maintains loan servicing software due to the alleged furnishing of inaccurate or incomplete consumer information to credit reporting agencies, and the Company’s alleged knowledge of the software defects that led to the inaccurate reporting.

The software in question was created by a third-party developer and licensed to the Company so that it could be provided to auto lenders with the goal of automating some of the processes to service auto loans, including providing consumer information to credit reporting agencies in the industry-standard format.  The CFPB alleged that the software was defective, and that the defects caused incorrect and/or incomplete consumer information to be provided to the credit reporting agencies including, but not limited to, the date of first delinquency, the frequency of payments due on the auto loan, actual payment amounts, amounts past due, payment rating, and the date the account was closed.

The CFPB further alleged that the Company was aware of the software defects and the potential for inaccurate reporting, and despite that knowledge, it continued to utilize the software and failed to inform its auto lender clients of the inaccuracies and/or defects.

In response to the alleged violations of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has ordered the Company to identify and propose resolutions to all furnishing defects caused by the defective software, to establish a comprehensive compliance plan to ensure that prior inaccurate/incomplete reporting is resolved and does not occur again in the future, and to pay a civil money penalty of $1.1 million to the CFPB Civil Penalty Fund.

The Consent Order was issued and signed on November 17, 2017, by the former Director, Richard Corday, prior to his departure from the CFPB on November 24th.  A further discussion regarding the CFPB and what may lie ahead can be found here: https://www.thewbkfirm.com/uncategorized/message-wbk-managing-partner-mitch-kider-leadership-changes-cfpb.

More information on the Consent Order can be found here: http://files.consumerfinance.gov/f/documents/cfpb_conduent-business-services_consent-order_112017.pdf.