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Consumer Finance Protection Bureau

Susan M Camp Stocks - Washington, D.C.

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consumerfinance.gov

Office of Enforcement Senior Enforcement Attorney/Military Affairs Liaison

ANGELA MARTIN, Consumer Financial Protection Bureau (CFPB)(2011-present)[Senior Enforcement Attorney/Military Affairs Liaison (2014-present); Senior Enforcement Attorney (2013); Chief Counsel, Office of Consumer Response (2012-2013); Enforcement Attorney (2011-2012)]; Consumer Attorney, Martin Attorney at Law, PLLC, Sanford, NC (2008-2011); employed as a civil servant in the U.S. Army JAG Corps, serving in Legal Assistance Offices in Hanau, Germany (V Corps), Fort Stewart, Georgia (Third Infantry Division) and Fort Bragg, North Carolina (XVIII Airborne Corps) (2001-2008); J.D., University of Georgia (1999); B.A. Political Science (Magna Cum Laude), University of South Carolina-Aiken (1997); U.S. Army enlisted member of the Military Intelligence Corps as a Czech and Persian-Farsi linguist (1984-1994); member of the bars of Georgia, North Carolina, U.S. District Courts for the Eastern, Middle, and Western Districts of North Carolina, Southern District of Georgia, and the Fourth Circuit United States Court of Appeals; CFPB Liaison to the American Bar Association’s Committee on Legal Assistance to Military Personnel (LAMP) Committee; member of the North Carolina State Bar LAMP Committee; served on the North Carolina State Bar LAMP Committee’s Executive Board and the Advisory Council for the Legal Aid of North Carolina; adjunct professor for consumer law at the military JAG schools since 2006.

Under the tutelage of Ms. Martin, the XVIII Airborne Corps Legal Assistance Office operated the only consumer law program in the Department of Defense which provided in-court representation for clients as plaintiffs and defendants in federal and state courts. The cases overwhelmingly consisted of litigation under the Fair Debt Collection Practices Act and third-party debt defense. Other cases arose from violations of the Truth-In-Lending Act, Unfair and Deceptive Trade Practices Act, other North Carolina Consumer Protection Statutes, North Carolina Landlord/Tenant statutes, and the Servicemembers' Civil Relief Act. Aside from monetary damages awarded to the clients, the litigation resulted in a general manager and other employees being fired, default judgments set aside, credit reports cleaned, security clearances granted or reinstated, automobile liens paid off, debts erased, evictions stayed, home foreclosures stopped and homes saved.

Ms. Martin currently serves as the Military Affairs Liaison for the Office of Enforcement at the CFPB. In that capacity, she works with the JAG attorneys on consumer law matters. Any attorney should feel free to contact Angela directly for any questions pertaining to consumer law matters. Her contact information is:

Angela O. Martin Senior Enforcement Attorney Military Affairs Liaison Office of Enforcement Consumer Financial Protection Bureau Mobile: 202 578 6956 Angela.Martin@cfpb.gov

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CFPB publications can be ordered free of charge:

http://promotions.usa.gov/cfpbpubs.html

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Recent Developments and the Consumer Financial Protection BureauLegal Assistance for Military Personnel

September 20, 2016

Susan M Camp Stocks, Senior Counsel Enforcement Policy and Strategy

What’s the CFPB up to?

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Bureau Offices

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Office of Servicemember Affairs

Consumer Response

Office of Enforcement

CFPB: Enforcement and Supervision Authority

Enforcement Depositories and credit unions >$10 billion plus affiliates and

service providers Nonbank providers of consumer financial products and services

Supervision Depositories and credit unions >$10 billion plus affiliates and

service providers Non-Depositories

• All Mortgage-related products and services, providers of private education loans, providers of payday loans

• Larger participants (Credit Reporting, Debt collection for example)

• Covered persons that Bureau has reasonable cause to determine are engaged in risky conduct

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Examples of Core Work

Auto loans Bank accounts and deposit

products Consumer reporting

(Credit Bureaus, Furnishers, Obtaining Credit reports) Credit cards Debt collection Debt relief and credit

counseling

Electronic fund transfers Fair lending General consumer finance Mortgage origination Mortgage servicing Payday lending Prepaid cards Student loans

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Selected Laws We Enforce

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Alternative Mortgage Transaction Parity Act (AMTPA) Consumer Financial

Protection Act (Title X of Dodd-Frank) Consumer Leasing Act (CLA) Electronic Fund Transfer Act Equal Credit Opportunity Act

(ECOA) Fair Credit Billing Act (FCBA) Fair Credit Reporting Act

(FCRA) Fair Debt Collection

Practices Act (FDCPA) Federal Deposit Insurance Act

(FDIA) Gramm-Leach-Bliley Act

Home Mortgage Disclosure Act (HMDA) Home Owners Protection Act

(HOPA) Home Ownership and Equity

Protection Act (HOEPA) Interstate Land Sales Full

Disclosure Act (ILSA) Military Lending Act (MLA) Omnibus Appropriations Act

2009 Real Estate Settlement

Procedures Act (RESPA) S.A.F.E. Mortgage Licensing Act Truth in Lending Act (TILA) Truth in Savings Act (TISA)

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9/9/2016

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MILES PROGRAM

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2013-CFPB-0003 In re U.S. Bank, N.A2013-CFPB-0004 In re Dealers’ Financial Services, LLC

MILES Program

US Bank Created MILES program and finances a

substantial majority of program loans 110k+ loans to SMs since 2001 Required payment by allotment* $3 processing fee not included in the finance

charge, resulting in an inaccurate APR

* Such allotments prohibited by DoD as of 1/1/2015

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MILES Program

DFS Exists solely to operate the MILES programManages MILES day-to-day operations Recruits and maintains 700+ auto dealer network Marketed and sold add-on products GAP insurance Understated cost Service contracts Understated cost Misled product benefits

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2013-CFPB-0003 In re U.S. Bank (MILES Program)

Truth in Lending Act Failing to properly inform SMs about fees

associated with the loan “finance charge” “includes any charge payable directly or

indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit” 12 C.F.R. 1026.4(a)(1)(i)

Failing to properly disclose schedule of paymentsCFPADeceptive marketing of add-on products (cost of

GAP insurance; cost and coverage of service contracts)

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MILES Program

“MILES Program Engaged in Deceptive Marketing and Lending Practices”

“The CFPB has a special mission to protect servicemembers. The MILES program failed to properly disclose costs associated with repaying auto loans through the military allotments system and the expensive auto add-on products sold to active-duty military. We will continue our work to ensure that servicemembers are treated fairly.” (emphases added)

Director Richard CordrayJune 27, 2013

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Remedies

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Stop deceptive practices Restitution - $6.5M to Servicemembers Provide refunds or credits (w/o action) Stop requiring the use of allotments* Improve disclosures Required reporting

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2014-CFPB-0009 “ROME FINANCE CO.”

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2014-CFPB-0009 In re “Rome Finance Co.”

Culver Capital, LLC, Colfax Corp. AND two of its principals (Mr. Wilson and Mr. Collins) Chapter 7 bankruptcy proceedings Offered credit for purchasing computers, electronics, television, etc. Frequently in kiosks of malls near military installations Promised instant financing with no money down Inflated the cost of the goods to hide the true cost of credit provided

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2014-CFPB-0009 In re “Rome Finance Co.”

Regulation Z (Truth in Lending Act)Hid finance charges when marketing products Failed to provide periodic disclosures in monthly

billing statements

CFPAUnfairly facilitated deceptive information about

the cost of credit and the goodsUnfairly, deceptively, and abusively collected void

debt

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2014-CFPB-0009 In re “Rome Finance Co.”

“CFPB and 13 State Attorneys General Obtain About $92 Million in Debt Relief for ServicemembersHarmed by Predatory Lending Scheme”

“Rome Finance’s business model was built on fleecing servicemembers. Rome Finance lured servicemembers in with the promise of instant financing on expensive electronics, then masked the finance charges with inflated prices in marketing materials and later withheld key information on monthly bills. Today, their long run of picking the pockets of our military has come to an ignominious end.” (emphases added)

Director Richard CordrayJuly 29, 2014

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Remedies

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$92 million in debt relief; consumers may keep the merchandiseUpdate consumers’ credit reports as paidPermanently barred Mr. Williams, Mr. Collins, and Rome FinancePay redress for hidden charges (suspended)Pay $1.00 CMPTrustee will cooperate with SMs and consumers to vacate judgments

2014-CFPB-0011 IN RE USA DISCOUNTERS, LTD (USA LIVING)

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2014-CFPB-0011 In re USA Discounters, LTD

Operates a chain of retail stores near military installations and offers financing for purchases Based in Norfolk, VA Uses standardized contracts tailored to members of the Armed Forces SMs agreed in the contract to pay a $5 fee for SCRA Specialists to be their representative under the SCRA SCRA Specialists sole source of revenue was USA Discounters Helped USA Discounters sue SMs

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2014-CFPB-0011 In re USA Discounters, LTD

Consumer Financial Protection Act

Deceptively marketing its own legal obligation as a service to servicemembers

Misleading servicemembers into believing they would have an independent representative

Failing to provide actual services to borrowers

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2014-CFPB-0011 In re USA Discounters, LTD

CFPB Shuts Down USA Discounters’ Servicemember Fee Scam

“Today we shut down USA Discounters’ fee scam that was designed to exploit unsuspecting servicemembers. USA Discounters charged servicemembers for legal protections they were already entitled to, and for services that were never actually provided. Targeting servicemembers with scams disguised as legal benefits is unconscionable, and we will not allow this injustice to continue.” (emphases added)

Director Richard CordrayAugust 14, 2014

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Remedies

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End unfair and deceptive practices Stop charging SCRA-related fees Restitution - $350,000 Penalty - $50,000

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CFPB V. FREEDOM STORES, INC.

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2:14cv643 ANA/TEM, E.D. Va. (Dec. 18, 2014)

The States of North Carolina and Virginia joined in this Action.

Freedom Stores, Inc. et al.

Defendants: Freedom Stores, Inc.; Freedom Acceptance Corp.; Military Credit Services, LLC; Mr. J. Melley; Mr. Leonard Melley

Freedom Stores operate in 14 stores nationwide near military installations

Military Credit Services is owned by the Melleys and finances over 300 independent consumer goods retailers

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Freedom Stores, Inc. et al.

Defendants:Filed over 3,500 lawsuits from July 2011 until December 2013; almost all resulted in default judgmentsDouble dipped with receipts of allotments AND taking funds from bank accountsContacted the chain of command to collectDebited accounts of prior payors Freedom Stores: failed to disclose terms of pre-authorized charges

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Freedom Stores, Inc. et al.

Truth in Lending Act Bureau claim only against MCS only

Electronic Funds Transfer Act Bureau claim only against Freedom only

CFPA (Bureau with NC and VA) Unfairness claims Distant forum Improper 3rd party Withdrawing payments from a related payor without

authorization Causing double payments

Abusive claim – Distant forum

State law claims – NC and VA

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Freedom Stores, Inc. et al.

“CFPB and States Take Action Against Freedom Stores for Illegal Debt Collection Practices Against Servicemembers”

“Our nation’s servicemembers deserve better than to be targeted with illegal collection tactics when they are struggling to pay their bills. Freedom Stores and its affiliated companies were filing thousands of lawsuits in Virginia against consumers not from there, taking money from some consumers’ bank accounts without permission, and using the military chain of command to pressure and humiliate servicemembers. Today’s action sends a clear message that the Consumer Bureau will continue to aggressively defend the rights of servicemembersand all consumers.” (emphases added)

Director Richard CordrayDecember 18, 2014

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Remedies

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$2.5 million in consumer redress $100,000 civil money penalty Barred from further violations Subject to monitoring

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SECURITY NATIONALAUTOMOTIVE ACCEPTANCE COMPANY, LLC (SNAAC)

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2015-CFPB-0027 In re: Security National Automotive Acceptance Company, LLC

CFPB v. Security National Automotive Acceptance Company, LLC1:15-cv-401-WOB, S.D. Ohio (Oct. 26, 2015)

SNAAC, LLC

Defendant: Ohio-based auto finance company specializing in lending to servicemembers

Operates in > 2 dozen states

Tactics took advantage of servicemembers’ special obligations to remain current on debts

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SNAAC, LLC

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Exaggerated potential disciplinary action that servicemembers would face

Contacted and threatened to contact commanding officers to pressure servicemembers into repayment

Falsely threatened to garnish servicemembers’ wages

Misled servicemembers about imminent legal action

Consumer Financial Protection Act of 2010

Prohibiting unfair, deceptive, or abusive acts or practices (12 U.S.C. §5531)

Prohibited acts (12 U.S.C. §5536)

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SNAAC, LLC

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“Bureau Sued Auto Lender Earlier This Year for Deception and Threats to Contact Commanding Officers”

“Security National Automotive Acceptance Company must refund or credit its customers $2.28 million for coercing money out of them using illegal debt collection practices. Servicemembers should not be forced to paybecause a debt collector used deceptive pressure tactics.” (emphases added)

Director Richard CordrayOctober 28, 2015

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SNAAC, LLC

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$2.28 million in consumer redress $1 million civil money penalty Injunction: “Conduct relief” Third-party contacts Representations Cease using contractual provision Barred from further violations Subject to monitoring

Remedies

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Other Recent CFPB Enforcement Actions

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Furnishers/Debt Collector

Interstate Auto Group (Car Hop)

Collecto (EOS)

Wells – Late Addition!

Interstate Auto Group, Inc. aka CarHop and Universal Acceptance Corp (affiliated finance co.)

Large “Buy-Here, Pay-Here” Auto Dealer

Allegations included:

Deceived consumers into believing they could build up good credit but failed to furnish information that would support “good credit” for tens of thousands of consumers.

Inaccurately reported that cars had been repossessed and that customers still owed money

Failed to have reasonable written policies and procedures to ensure the accuracy of consumers’ credit information

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Collecto, Inc. dba EOS CCA

Third-party debt collector purchased over 3 million defaulted telecommunications accounts from AT&T

Allegations included:

Collected and reported on debts that it did not substantiate

EOS learned the portfolio it purchased contained fraudulent debts, debts that consumers had paid or settled, and debts that were so old that they could no longer be legally collected.

Reported inaccurate dispute information

Shortly after it started collecting on the portfolio, EOS reported to the credit reporting companies that all three million of the debts were disputed by consumers, when EOS knew not all of the accounts had been disputed.

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Wells Fargo Bank, NA

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Consumer Reporting Agencies and How to Reach Them

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http://files.consumerfinance.gov/f/201604_cfpb_list‐of‐consumer‐reporting‐companies.pdf 

Complaints – How to submit complaints

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Ask CFPB – ConsumerFinance.gov/askcfpb

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