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Compliance

Online Reviews and Compliance

Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

Over the last few years, businesses everywhere have been working hard to establish a positive online presence beyond just their website. It’s become standard practice for lenders to be listed on websites like consumeraffairs.com, lendingtree.com, and bankrate.com. The reason behind these listings is to build trust online and develop a brand presence.

After all, it would be extremely difficult to find an industry that hasn’t been affected by the prevalence of consumers who conduct online research for products and services, including reviews, before making a decision. This tends to become more prevalent with services and purchases that could have long-term repercussions, including insurance, loans, credit cards, etc.

Now, you’re probably asking yourself, what does this have to do with compliance?

In this highly integrated world of online reviews and social media, it can be tempting for lenders to use cookie cutter, online review vendors to boost positive reviews while minimizing negative reviews. For example, one widely used tactic across all industries is to utilize contract provisions, including online terms and conditions, to penalize consumers for posting negative reviews or complaints. This specific tactic has been ruled as illegal under the Consumer Review Fairness Act (CRFA), which protects people’s ability to share in any forum their honest opinions about a business. Specifically, the CRFA makes it illegal for a company to use a contract provision that:

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CFPB – A Year in Review

Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

A lot has happened with the Consumer Financial Protection Bureau (CFPB) in the past year. From large settlements to court rulings, the CFPB brought itself under the spotlight.

Let’s start at about this time last year. The House of Representatives passed H.R. 1737, the “Reforming CFPB Indirect Auto Financing Guidance Act” with a strikingly majority vote of 332-92. The piece of legislation would direct the CFPB to amend how it issues guidance to indirect auto lenders by:

  • providing a public notice and comment period before issuing the guidance in final form;
  • making publicly available all information relied on by the CFPB, while also redacting any information exempt from disclosure under the Freedom of Information Act;
  • consulting with the Board of Governors of the Federal Reserve System, the Federal Trade Commission, and the Department of Justice; and,
  • study the costs and impacts of the guidance to consumers, as well as women-owned and minority-owned small businesses.

In addition, the bill would nullify the CFPB’s “Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act Bulletin”. This bulletin instructed lenders to either eliminate dealer pricing discretion, or constrain dealer pricing discretion by monitoring dealership practices and using “controls” to force dealerships to adjust their practices.

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Compliance

Keep On Keeping On

Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

The Consumer Financial Protection Bureau (CFPB) has not come out unscathed in the wake of the Wells Fargo scandal. While some say the CFPB’s enforcement action demonstrates a need to strengthen the agency, others use the scandal as a case study to demonstrate the bureau’s inept and over-reaching practices. What’s behind the controversy surrounding the CFPB on this case? The L.A. Times broke the story of Wells Fargo deceptive practices in 2013, yet it just recently got the attention of the CFPB. Regulators are now asking the CFPB to account for this lapse.

In the background of all this, the Senate is scheduled to vote on legislation that could curb the CFPB’s independence. While both dealers and lenders avidly await that decision, it’s important to remember that the legislation does not dismantle with the bureau. And, with everything still up in the air, the best practice to undertake is to keep on overhauling your own compliance practices.

Regardless of any legislative changes, compliance will continue to be in the spotlight in the coming years. Whether the CFPB functions under more strict parameters or continues to have free reign over lending practices, we can expect them to continue to work to expand their influence.

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