CFPB Study and Remittance Transfers Update
Consumer Financial Protection Bureau Study Finds Credit Scores Used by Consumers and Lenders Can Differ
On September 25, 2012, the Consumer Financial Protection Bureau (CFPB) released a study comparing credit scores sold to creditors and those sold to consumers. The study found that about one out of five consumers would likely receive a meaningfully different score than would a lender. The study determined the following:
- When consumers purchase their score from a credit bureau, the score they receive may be meaningfully different from the score that a lender would consult in making a decision. A meaningful difference means that the consumer would be likely to qualify for different credit offers – either better or worse – than they would expect to get based on the score they purchased.
- When discrepancies exist between the scores consumers purchase and the scores used for decision-making by lenders in the marketplace, consumers may take action that does not benefit them. For example, consumers who have reviewed their own score may expect a certain price from a lender may waste time and effort applying for loans they are not qualified for, or may accept offers that are worse than they could get.
- There is no way for consumers to know how the score they receive will compare to the score a creditor uses in making a lending decision. As such, consumers cannot exclusively rely on the credit score they receive to understand how lenders will view their creditworthiness.
The CFPB will begin supervising consumer reporting agencies as of September 30, 2012. CFPB examiners will be looking to verify that consumer reporting companies are complying with federal consumer financial law, including that the companies are using and providing accurate information, handling consumer disputes, making disclosures available, and preventing fraud and identity theft. It is possible that through these examinations, the CFPB may look further to the entities providing information to these consumer reporting agencies, such as credit unions and other financial institutions. As such, CUNA will be following the CFPB’s efforts in these areas with interest in the coming months. For a copy of the CFPB’s full report, click here.
CFPB Remittance Transfers Update and October 16 Webinar
The Credit Union National Association (CUNA) will meet with CFBP Director Cordray on October 18, 2012, to continue identifying concerns about the international remittances final rule that will take effect February 7, 2013. At the invitation of Director Cordray, a working group is being developed who will meet with the Director. The group members will be identified and reported to the Missouri Credit Union Association once they are established.
Meanwhile, on September 26, the CFPB made a blog post regarding several updates on the remittance transfers final rule. The agency released a safe harbor list of countries that qualify for an exception under the final rule; this safe harbor would permit estimated disclosure of certain figures in lieu of disclosure of exact amounts. The CFPB intends to revise this list as needed and welcomes suggestions for additions or deletions to the list. In the upcoming weeks, the agency also plans to release a small business guide to assist smaller entities with compliance.
On October 16, the CFPB will host a webinar to go over the remittance transfer final rule’s requirements for money transmitters, financial institutions, credit unions, and others that send money abroad. Credit unions and other participants can RSVP by October 9 by email, and also send any questions to that email address about the final rule by October 5. The agency plans to address some of the submitted questions during the webinar.