Oct. 11: CFPB Recent Updates
CFPB Takes Action Against Arbitration Platform Ejudicate for Deceiving Student Borrowers
In April 2022, Ejudicate illegally started arbitration proceedings against consumers who had allegedly defaulted on loans from Prehired and misrepresented itself to those borrowers. Specifically, the CFPB found that Ejudicate harmed borrowers by:
- Falsely claiming to be a neutral arbiter: The company described itself as “neutral and unbiased” in communications with consumers, despite its financial interest in consumers settling with Prehired. Prehired promised to pay Ejudicate contingency fees for each claim that it settled.
- Unfairly attempting to bind consumers to sham proceedings: Ejudicate required consumers to “agree” to its terms of service, which purported to bind consumers to Ejudicate’s dispute resolution process, even if consumers simply wanted to review the claims against them. Ejudicate’s bogus process left student borrowers with little opportunity to gather evidence or clarify facts needed to defend themselves against the claims lodged against them.
- Starting arbitration proceedings without borrower consent: Although Ejudicate was aware that consumers had not agreed to arbitrate on the Ejudicate platform, it initiated arbitration proceedings for claims that each sought tens of thousands of dollars from student borrowers.
CFPB Takes Action Against Wrongful Auto Repossessions and Loan Servicing Breakdowns
The Consumer Financial Protection Bureau and the Federal Reserve Board today announced the dollar thresholds used to determine whether certain consumer credit and lease transactions in 2025 are subject to certain protections under Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing).
By law, the agencies are required to adjust the thresholds annually based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W. Transactions at or below the thresholds are subject to the protections of the regulations.
Specifically, based on the 3.4 percent annual percentage increase in the CPI-W as of June 1, 2024, Regulation Z and Regulation M generally will apply to consumer credit transactions and consumer leases of $71,900 or less in 2025. However, private education loans and loans secured by real property, such as mortgages, are subject to Regulation Z regardless of the amount of the loan.
The Consumer Financial Protection Bureau, the Federal Reserve Board, and the Office of the Comptroller of the Currency today announced that the 2025 threshold for higher-priced mortgage loans that are subject to special appraisal requirements will increase from $32,400 to $33,500.
The threshold amount will be effective January 1, 2025, and is based on the 3.4 percent annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W, as of June 1, 2024.
The Dodd-Frank Act added special appraisal requirements for higher-priced mortgage loans to the Truth in Lending Act, including that creditors obtain a written appraisal based on a physical visit to the interior of the home before making a higher-priced mortgage loan. The rules implementing these requirements contain an exemption for loans of $25,000 or less, adjusted annually to reflect CPI-W increases.