A new report released by The Consumer Financial Protection Bureau (CFPB) has shown that some auto loan servicers are still engaging in unfair or illegal practices in vehicle repossessions.
The Supervisory Highlights report details some of the key findings for the year when it comes to legal violations in the financial products and services industry.
After completing the investigations, the CFPB identified a number of problems. One of the key issues raised was that some auto loan servers were engaging in unfair acts or practices.
For example, some providers were repossessing vehicles despite the customer taking action to stop the repression. In some cases, the consumers were unaware of the repression altogether.
According to the report, these repossessions often have other consequences. For example, some consumers were charged additional fees and it negatively impacted their credit score.
“While most entities act in good faith to follow the law, CFPB examiners are identifying law violations that lead to real harm,” said CFPB Director Rohit Chopra.
He added. “We will continue to examine firms to proactively identify and mitigate harmful practices before they become widespread.”
Are cars allowed to be repossessed?
The law states that, in most cases, cars can be repossessed, but there needs to be a court order in place and the borrower must have breached their contract.
Additionally, lenders need to follow the proper rules and procedures, including attempting to contact the customer and offering opportunities to get back on track with payments.
This report shows that some lenders are still failing to comply with federal consumer finance laws. Investigators found many repossessions with “poor communication”. Additionally, some consumers were behind on payments because they had been misled about the amounts owed.
The CFPB also found that credit reporting companies weren’t always following the regulations to ensure that credit reporting is fair and accurate.
Under the Fair Credit Reporting Act, any disputes must be followed by a reasonable investigation to make sure the information provided is correct.
Having a lower credit score can have a significant effect on consumers, as it can make them less attractive to banks and financial institutions. It can mean losing access to some products, as well as paying higher interest rates and fees.