Senate Kills Arbitration Rule in Setback for Consumers

On October 24, 2017, Vice President Mike Pence cast a tie-breaking vote in the Senate to repeal the Consumer Financial Protection Bureau’s arbitration rule. The rule prohibited covered providers of financial products and services from banning participation in a consumer class action as part of a pre-dispute arbitration clause. The rule was issued after a 2015 study showed that pre-dispute arbitration agreements prevent consumers from seeking relief when financial service providers violate the law.

All Democrats and just two Republicans—Lindsay Graham (S.C.) and John Kennedy (La.)—voted against repeal. The House voted in July to repeal the rule with all Democrats and only one Republican, Walter Jones (N.C.), opposing. President Donald Trump has signed the bill into law.

One day before the Senate vote, the Treasury Department issued a report harshly criticizing the CFPB’s justifications for the rule. Treasury argued, among other things, that consumer class actions impose extraordinary costs on businesses while providing little relief to consumers. Treasury warned that the rule would “effect a large wealth transfer to plaintiffs’ attorneys” while encouraging meritless litigation. In lieu of banning class action participation, Treasury suggested that simply requiring more prominent disclosures would better protect consumers.

CFPB Director Richard Cordray said in a statement that the vote was “a giant setback for every consumer in this country,” noting that “Wall Street won and ordinary people lost.”

– Kelly Harpster

 

Public Service Loan Forgiveness — The First Eligible Recipients

October 2017 marks the first month that qualified student loan borrowers should be eligible for Public Service Student Loan Forgiveness (PSLF). Anxiety and anticipation is high as borrowers wait to see who, if anyone, will be successful at having their student loans forgiven. Over the past year, some borrowers received the bad news that the federal Department of Education (DOE) believed that they did not qualify for loan forgiveness. In December, the American Bar Association (ABA) filed a lawsuit against the DOE on behalf of four such attorney borrowers who for almost 10 years have believed they were on course to have their loans forgiven.

In 2007, President George W. Bush signed PSLF into law, which promised student loan borrowers who went into public service fields that their remaining federal student loan debt would be forgiven after 10 years of qualifying payments. At the start of the PSLF program, few debtor payments qualified for eventual forgiveness. The program has very specific rules for which loans and borrowers qualified. Borrowers must:

  1. Public Service. Work for a not-for-profit 501(c)(3), government organization or other not-for-profit. This does not include labor unions, political partisan organizations or for-profit entities. The employer does not need to be the same employer, and multiple public service employers can be counted towards the 10 years. Borrowers may qualify even if there was a break in public employment.
  2. Full-Time Employee. Be employed full-time as defined by your employer, but no less than 30 hours per week if your employer defines full time as less than 30 hours per week.
  3. Direct Student Loans. Have federal student loans under the Federal Direct Loan program only. Private student loans are not included. Worse, federal loans under the popular Perkins loans and pre-2010 program of Federal Family Educational loans do not qualify. If these federal loans were consolidated into a Direct Loan, then payments can begin to qualify.
  4. Approved Payment Plan. Pay under a qualified payment plan: Any of the income-driven repayment plans or the standard 10-year plan are PSLF-approved plans. This does not include the graduated payment plan, extended repayment plan or any plan that has a specific repayment date beyond 10 years such as the 25-year repayment plan.
  5. Make payments after October 1, 2007. Any payments made before October 1, 2007, do not qualify.
  6. On-time payments. Pay no later than the 15th day after payments are due. Payments made while under the grace period, deferment or forbearance do not count (except partial-forbearance if under one of the income-driven repayment plans).
  7. 120 payments. Make 120 monthly payments coinciding with the requirements listed above. Prepayments are not counted. Multiple months paid at one time count as one payment only, not more.

During the first 5 years of the program there was no mechanism in place to determine if a borrower was on the right track for loan forgiveness. It was not until 2012 that the DOE released an optional form that borrowers could submit to be given an estimate of their qualifying date.

It is through this form that some borrowers, including the plaintiffs in the ABA’s case, received news from the DOE that it did not believe that they qualified for forgiveness. In the ABA case, the plaintiffs were also ABA employees. The ABA is a not-for-profit organization, but it is not a 501(c)(3) or government entity. The DOE decided that the ABA did not qualify as the right kind of public service employer, though previously the DOE had indicated that the ABA was a public service employer. In response to the ABA lawsuit, the DOE held the position that its employment certification form has no legal effect and that borrowers have no assurance whether they are on the right track until they actually apply for forgiveness at the end of the 10-year period.

Further litigation seems inevitable as borrowers receive their rejection letters this month. In the meantime, the ABA lawsuit is still pending, and the DOE has released the form for borrowers to apply for forgiveness.

Written By: April Kusters

Wells Fargo Facing New Mortgage Accusations

 

By David Koen

A pair of related suits have been filed against Wells Fargo Bank, N.A., charging the third-largest bank in the United States with improperly overcharging for mortgage loans.

In one suit, a class action, Wells Fargo is alleged to have delayed loans to bilk customers into paying fees to keep their agreed-upon interest rate. Muniz v. Wells Fargo & Co., No. 17-4995 (N.D. Cal.). An investigation into the practices contributed to the bank “part[ing] ways with a handful of mortgage executives, including its former national sales manager and regional managers in California, Oregon and Nevada.” http://www.latimes.com/business/la-fi-wells-fargo-rate-lock-20170829-story.html.

In the other suit, a Wells Fargo employee claims he was fired after blowing the whistle on allegedly improper rate-lock practices by the bank. That case is Alaniz v Wells Fargo Bank, N.A., No. 17-5066 (C.D. Cal.).

David Koen is a staff attorney at Legal Aid Services of Oregon

Recapping The 2017 Legislative Session

The 2017 legislative session is over. There are a number of bills that may impact your practice – or at least that you will want to know about in order to better screen and advise prospective clients. Below is a list of bills with very short summaries. If you are interested in any of them, you can read the full bill text at olis.leg.state.or.us. Or, you can wait until a more detailed summary of many of these bills is available through the Bar. Unless noted below, the effective date of these bills is January 1, 2018.

Mortgage / Foreclosure / Housing / Rental

SB 79 – Effective date: June 6, 2017. The VA can opt out of participating in a resolution conference.

SB 98 – Waiting for the governor’s signature. Titled the Mortgage Loan Servicer Practices Act. Requires a license from DCBS for mortgage servicers. Sections 9, 12 and 14 set forth requirements for mortgage servicers.

SB 277 – Effective date: June 14, 2017. Requires at least 30 days written notice before terminating a rental agreement for a manufactured dwelling or floating home in serious disrepair. Otherwise, termination notice for disrepair is extended to 60 days. A landlord needs to provide information about disrepair to prospective tenants.

SB 381 – Requires certain loan notices to be mailed to all addresses on file, including a PO Box.

SB 838 – Adds exceptions to ORS 94.807 related to timeshares.

HB 2359 – Removes the requirement in ORS 86.748 for a beneficiary to mail a copy of the notice to DOJ.

HB 2562 – Enhances notice provisions relating to taxes for reverse mortgages.

HB 2624 – Changes exemption for certain banks under ORS 713.300.

HB 3184 – Effective date: June 6, 2017. DCBS can develop a loan counseling program.

Motor Vehicles / Towing

SB 117 – Requires a tower to get written consent from a parking lot owner prior to towing a vehicle, unless the vehicle blocks the entrance or another vehicle or in certain apartment complexes. Requires tower to tow vehicle to tower’s nearest storage facility in the same county. Adds additional causes of action under ORS 646.608.

SB 134 – Amends ORS 646A.090. Allows dealer to provide notice through written electronic communication. Dealers can charge for all mileage added to the vehicle, unless the consumer made a reasonable attempt to return the vehicle within 5 days of receiving notice, in which case the dealer cannot charge for any mileage.

SB 338 – Exempts consumer finance companies from needing to comply with GAP waiver provisions.

SB 488 – Requires law enforcement to share contact information from a stolen vehicle report with a tower, when the tower tows a vehicle reported as stolen. Allows a consumer who does not have applicable insurance coverage to transfer title to a tower in lieu of paying the towing and storage fees.

SB 974 – Increases motorcycle dealers’ bond to $10,000, but limits claims to retail customers. Increases other vehicle dealers’ bond to $50,000 and limits non-retail customer bond claims to $10,000. Eliminates any new motorcycle dealer certificates (aka DMV dealer license).

Collections Activities / Student Loans

SB 253 – Requires colleges to provide certain information to students about federal student loans.

SB 254 – Waiting for the governor’s signature. Requires financial institutions to participate in a data match system established by the Department of Revenue. Prohibits garnishment for delinquent child support obligors.

HB 2134 – Effective date: January 2, 2018. Raises the amount that can be collected for low-income electric bill payment assistance.

HB 2356 – Debt buyers need to include certain information in a complaint. A debt buyer needs to provide a consumer the underlying documents within 30 days of receiving a request from the consumer. Amends ORS 646.639 to prohibit: collection of certain medical expenses; filing a legal action after the statute of limitations expires; collecting amounts not authorized by the agreement creating the debt or permitted by law; and a debt buyer from filing a legal action without having certain documents in its possession. Requires a license from DCBS for debt buyers.

Court / Notices / Business Records

HB 2191 – Waiting for the governor’s signature. Gives the Secretary of State investigatory and enforcement authority. Provides that officers, directors, employees and agents of shell entities are liable for damages in certain instances. Articles of incorporation must include a physical street address and contact information for at least one individual. A registered agent cannot be at a mail forwarding company or a virtual office.

HB 2357 – Amends ORS 33.025 relating to contempt of court to include LLCs and partnerships.

HB 2619 – Amends ORS 726.400 to permit pawnbrokers to provide electronic notice.

HB 2734 – Allows a spouse to appear in certain circumstances in small claims court.

HB 2920 – Requires judgment creditor to file a satisfaction. Permits judgment debtor’s reasonable attorney fees in certain circumstances if judgment debtor does not file a satisfaction.

Residential care facilities

HB 2661 – Waiting for the governor’s signature. Requires certain disclosures by a referral agent before providing a client with a long term care referral. Prohibits certain referrals and sharing of information when the referral agent has a potential conflict of interest. Creates a cause of action under ORS 646.608. Requires referral agents to be registered with DHS.

HB 3359 – Waiting for the governor’s signature. Gives DHS investigatory and enforcement authority over residential care facilities and long term care facilities. Requires DHS to publish annual reports. Increases licensing fees. Requires facilities to have certain employee training.

Misc.

SB 330 – Requires customer to affirmatively agree to receive electronic notices for portable electronics insurance. Reduces advance notice of modification or termination of insurance to 30 days.

HB 2090 – Requires company to follow its publicly published privacy policy. Enforced by the Attorney General under ORS 646.607.

SCOTUS Holds that Auto Loan Lender Santander Is Not a Debt Collector Pursuant to the FDCPA

By Kelly D. Jones, Consumer Rights Attorney

On June 12, 2017, the U.S. Supreme Court issued a unanimous decision in Henson v. Santander Consumer USA Inc., the first decision authored by Justice Gorsuch. The slip opinion can be found here.

Santander Consumer USA Inc. is a subsidiary of a large European bank conglomerate, and the principal purpose of its business is extending and servicing auto loans. Although it typically does not purchase accounts or debts from other creditors, in this instance, Santander purchased a portfolio of defaulted auto loan accounts from CitiFinancial Auto that had been the subject of a class action settlement against CitiFinancial. This portfolio included accounts owed by Ricky Henson and other consumers. Santander attempted to collect on the accounts, and Henson, along with four other Maryland consumers, sued Santander and multiple other defendants in the United States District Court for the District of Maryland, alleging various violations of the federal Fair Debt Collection Practices Act (FDCPA).

Santander filed a motion to dismiss the FDCPA lawsuit, arguing that it was not a “debt collector” pursuant to the FDCPA and thus could not be found liable. 15 U.S.C. § 1692a(6) defines debt collector, in part, as

any person [1] who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or [2] who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.

The district court and the Fourth Circuit  both concluded that because Santander’s principal business purpose is the origination and servicing of auto loans, it did not qualify as a debt collector under the first definition. Santander also argued it was not a debt collector pursuant to the second definition because it does not regularly collect debts owed or due to another entity, as the only debts it attempted to collect that it did not originate were debts it owned. The Supreme Court upheld the decision of the Fourth Circuit, finding that Santander was not a debt collector that could be found liable for violating the FDCPA. The Court also rejected Henson’s argument that because 15 U.S.C. § 1692a(6)(F)(iii) specifically excludes persons who collect non-defaulted debt from the definition of debt collector, the term debt collector included all entities that regularly attempt to collect debts obtained after default.

Practitioners should be careful to note that the Supreme Court did not hold that debt buyers, in general, are not subject to the FDCPA simply because they may have purchased defaulted debts from another entity before they began collecting on the debts. The Court merely found that entities that are collecting upon debts that they own are not debt collectors under the second definition of 15 U.S.C. § 1692a(6), and it made sure to point out that it was not addressing the first definition (“principal purpose”) of debt collector by stating:

[T]he parties briefly allude to another statutory definition of the term “debt collector”—one that encompasses those engaged “in any business the principal purpose of which is the collection of any debts.” §1692a(6). But the parties haven’t much litigated that alternative definition and in granting certiorari we didn’t agree to address it either.  With these preliminaries by the board, we can turn to the much narrowed question properly before us.

Henson v. Santander Consumer USA, Inc., No. 16–349, slip op. at 3 (U.S. June 12, 2007). The two definitions of debt collector are clearly distinct, and an entity that meets either definition is regulated by the FDCPA. See Schlegel v. Wells Fargo Bank, NA, 720 F.3d 1204, 1208-10 (9th Cir. 2013); Pollice v. Nat’l Tax Funding, L.P., 225 F.3d 379, 405 (3d Cir. 2000). Unlike entities such as Santander, whose principal business purpose is originating and servicing active loans, the principal purpose of debt buyers is the acquisition of defaulted debts for the purpose of collecting on the debts—regardless of whether they themselves then collect on the debts or hire other debt collectors to collect on their behalf. See, e.g., Pollice, 225 F.3d at 405; see also Davidson v. Capital One Bank (USA), N.A., 797 F.3d 1309, 1316 n.8 (11th Cir. 2015) (distinguishing creditors like Capital One from other entities such as debt buyers, whose “principal purpose” of business is the purchase and collection of charged off debts, that cannot escape FDCPA regulation). After all, a debt buying business that acquired debts for any other purpose besides to collect them (or directing others to do so) would not be in business for long.

For a more detailed analysis of the debt buying industry check out this 2013 study by the FTC:  “The Structure and Practices of the Debt Buying Industry.”

Is Your Lemon Law Case Ripe for Litigation?

Each week I field calls from people that have purchased a defective vehicle.   The caller typically informs me they recently purchased a “lemon” and the vehicle suffers from various mechanical issues. At that point it is important to ask a few basic questions to determine if this is truly a lemon law case.  If it is truly a lemon law case then you must determine if it is ripe for litigation.

Oregon’s Lemon law is comprised of a group of statutes starting at ORS 646A.400 and continuing through ORS 646A.418.  The law basically states that if a new motor vehicle does not conform to the manufacturer’s express warranty, and the consumer alerts the manufacturer or the authorized dealer of the nonconformity, then the consumer may be entitled to a replacement or a refund, and damages.  However, before a consumer is able to obtain damages they must comply with the nuanced legal requirements.

First, the motor vehicle must qualify to be protected by the lemon law.  The motor vehicle may be no more than two years old or have less than 24,000 miles on it, whichever period ends first.  Most consumers cannot meet this first element because the vast majority of the “material defect” used car cases involve vehicles over 2 years old.  The Lemon Law also does not apply to travel trailers because they are not motor vehicles.  In other words the lemon law only applies to self-propelled vehicles or those designed for self-propulsion.

The second big issue the consumer typically faces is that they must report each “nonconformity” to the manufacturer, or the authorized dealer, for the purpose of repair or correction during the two-year period following the date of delivery or before the vehicle’s mileage reaches 24,000, whichever comes first. The law provides consumers presumptions that the motor vehicle is a lemon if there were a reasonable number of attempts to do such reporting under the vehicle’s express warranties, and the manufacturer receives advance notice of the defects before attempting the repairs.  The law presumes a reasonable number of attempts have been made if the vehicle has either been in the shop 3 or more times, and the defect continues, or the vehicle is out of service by repair for a cumulative total of 30 or more calendar days.  There is also another presumption the vehicle is a lemon if there is one attempted repair of a nonconformity likely to cause death or serious injury but the defect continues. However, those presumptions won’t apply if the manufacturer did not receive notice of the nonconformity.

The vehicle manufacturer must receive “direct written notification” from the consumer, and must be provided the opportunity to correct the alleged defect.  Notification can be a request for an “informal dispute settlement procedure.”  This means that the consumer must put the manufacturer or the authorized dealer on notice the vehicle is defective and provide an opportunity to cure the alleged defect. It also means that if the manufacturer has established an informal dispute settlement procedure and notifies the consumer of the procedures, then the consumer must resort to the informal resolution procedure (arbitration) prior to filing a lawsuit.  The informal resolution procedure is not binding on the consumer but may be binding on the manufacturer.

If the consumer can satisfy the legal requirements, then their case may be ripe and they may feast on the Lemon Law remedies.  The remedies may include rescission, replacement of the vehicle, or triple damages (capped at $50,000.00 above the amount owed to the consumer). The court may also award discretionary attorney fees and costs.  The Lemon law can be a powerful tool.  Unfortunately, it can also be a sour pill to swallow if the consumer learns they failed to comply with the notice requirements or their vehicle is too old to qualify as a lemon.

Jeremiah Ross is an attorney in Portland Oregon.  Please remember this blog is a summary of the law.  Please refer to the actual law or a lawyer for an evaluation of your case.   Do not rely on this post for legal advice.  The law is constantly changing and this post may be outdated.  Please do not cite this post in any governmental proceeding, arbitration, hearing, or negotiations.

CFPB Sues Four Online Lenders

The Consumer Financial Protection Bureau (CFPB) has sued four online lenders for deceiving consumers by collecting debt the consumers did not legally owe.  The loans were void under state laws, yet the lenders made deceptive demands and continued to pursue collection of the debts.

https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-four-online-lenders-collecting-debts-consumers-did-not-legally-owe/

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today took action against four online lenders – Golden Valley Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit Financial, Inc., and Majestic Lake Financial, Inc. – for deceiving consumers by collecting debt they were not legally owed. In a suit filed in federal court, the CFPB alleges that the four lenders could not legally collect on these debts because the loans were void under state laws governing interest rate caps or the licensing of lenders. The CFPB alleges that the lenders made deceptive demands and illegally took money from consumer bank accounts for debts that consumers did not legally owe. The CFPB seeks to stop the unlawful practices, recoup relief for harmed consumers, and impose a penalty.

“We are suing four online lenders for collecting on debts that consumers did not legally owe,” said CFPB Director Richard Cordray. “We allege that these companies made deceptive demands and illegally took money from people’s bank accounts. We are seeking to stop these violations and get relief for consumers.”

Golden Valley Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit Financial, Inc., and Majestic Lake Financial, Inc. are online installment loan companies in Upper Lake, California. Since at least 2012, Golden Valley Lending and Silver Cloud Financial have offered online loans of between $300 and $1,200 with annual interest rates ranging from 440 percent up to 950 percent. Mountain Summit Financial and Majestic Lake Financial began offering similar loans more recently.

The Bureau’s investigation showed that the high-cost loans violated licensing requirements or interest-rate caps – or both – that made the loans void in whole or in part in at least 17 states: Arizona, Arkansas, Colorado, Connecticut, Illinois, Indiana, Kentucky, Massachusetts, Minnesota, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, and South Dakota. The Bureau alleges that the four lenders are collecting money that consumers do not legally owe. The CFPB’s suit alleges that Golden Valley Lending, Silver Cloud Financial, Mountain Summit Financial, and Majestic Lake Financial violated the Truth in Lending Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act. The specific allegations include:

  •  Deceiving consumers about loan payments that were not owed: The lenders pursued consumers for payments even though the loans in question were void in whole or in part under state law and payments could not be collected. The interest rates the lenders charged were high enough to violate usury laws in some states where they did business, and violation of these usury laws renders particular loans void. In addition, the lenders did not obtain licenses to lend or collect in certain states, and the failure to obtain those licenses renders particular loans void. The four lenders created the false impression that they had a legal right to collect payments and that consumers had a legal obligation to pay off the loans.
  • Collecting loan payments which consumers did not owe: The four lenders made electronic withdrawals from consumers’ bank accounts or called or sent letters to consumers demanding payment for debts that consumers were under no legal obligation to pay.
  • Failing to disclose the real cost of credit: The lenders’ websites did not disclose the annual percentage rates that apply to the loans. When contacted by prospective borrowers, the lenders’ representatives also did not tell consumers the annual percentage rate that would apply to the loans.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is authorized to take action against institutions engaged in unfair, deceptive, or abusive acts or practices, or that otherwise violate federal consumer financial laws like the Truth in Lending Act. The CFPB is seeking monetary relief for consumers, civil money penalties, and injunctive relief, including a prohibition on collecting on void loans, against Golden Valley and the other lenders. The Bureau’s complaint is not a finding or ruling that the defendant have actually violated the law.

A copy of the complaint filed in federal district court is available at: http://files.consumerfinance.gov/f/documents/201704_cfpb_Golden-Valley_Silver-Cloud_Majestic-Lake_complaint.pdf

New Language Clarifies Limits of an “As Is” Clause

By: Young Walgenkim

On November 18, 2016 the Federal Trade Commission (FTC) amended the Used Motor Vehicle Trade Regulation (FTC Used Car Rule), which made several changes to the FTC Used Car Buyers Guide. The FTC Used Car Buyers Guide is a sticker approved by the FTC, and required to be affixed on the rear passenger window of used vehicles a dealer is offering for sale. The 2016 amendment to the FTC Used Car Rule purposely corrected a common confusion to the Buyers Guide – the AS IS clause.

Used car dealers often use the AS IS clause of the Buyers Guide to avoid any and all liability arising from used car sales. Whenever a consumer complains about a car purchase, dealers usually refuse to provide any remedy, believing that the AS IS clause shields them from all liability. Many consumers are also convinced that they have no remedy even when the dealer has plainly violated various consumer protection statutes. In an attempt to clear up the confusion, the FTC made the following amendment to the AS IS clause:

Old Rule:

AS IS – NO WARRANTY

YOU WILL PAY ALL COSTS FOR ANY REPAIRS. The dealer assumes no responsibility for any repairs regardless of any oral statements about the vehicle.

New Rule:

AS IS – NO DEALER WARRANTY

THE DEALER DOES NOT PROVIDE A WARRANTY FOR ANY REPAIRS AFTER SALE.

 

Contrary to what dealers think, AS IS does not mean that the dealer is completely absolved of any liability after the sale. As the new language suggests, AS IS simply means that the dealer is not offering any warranties with the sale of the vehicle. The Oregon Attorney General has further clarified this distinction in the official commentary of the Unlawful Trade Practice Act:

“Unless explicitly disclosed prior to a sale or lease, a motor vehicle that is offered for sale or lease to the public is represented, either directly or by implication, to be roadworthy when it is sold, to have an unbranded title and to have no undisclosed material defects. . . for used vehicles, even if the dealer states on the FTC Buyers Guide (“As Is”) that the dealer is not providing a warranty, the dealer must still disclose material defects about which the dealer knew or should have known.”

OAR 137-020-0020(3)(o) Official Commentary. In other words, if the dealer is selling a car that is not roadworthy, has a branded title, or has other material defects, the dealer must make a separate disclosure. Simply providing the AS IS disclosure in the FTC Buyers Guide is not enough.

Generally, it is a good idea to write down all of the dealer’s promises or representations on the contract prior to signing. However, even if you signed the AS IS clause and failed to write anything down, you may still have a remedy for purchasing a car with problems if the dealer knew or should have known of the defects.

 

Oregon Lawyer Michael Fuller

Fired Portland banker files whistleblower case against US Bank

Yesterday an Oregon banker filed a complaint against US Bank for whistleblower retaliation. Read the lawsuit.

Oregon Whistleblower

The banker, Paul Rodriguez, says US Bank supervisors wrongfully fired him after he reported a credit rating scandal to the government.

Oregon law protects employees from being fired for reporting illegal corporate behavior.

Whistleblower Portland

Prior to reporting US Bank to the government, Rodriguez managed a $1.2 billion banking portfolio in Portland.

According to the lawsuit, Rodriguez blew the whistle against US Bank after it gave a false credit rating to a California school district. When the district later defaulted on its loan to the bank, Rodriguez refused requests to keep quiet.

Whistleblower Complaint

Rodriguez says a bank supervisor tried to intimidate him when the bank learned he had an upcoming interview with a federal investigator. Rodriguez says the supervisor claimed to be “friends” with the investigator Rodriguez was set to meet in January 2015.

Multnomah County Case No. 17CV07898

Written by Oregon Lawyer Michael Fuller.

CFPB Orders Equifax and TransUnion to Pay $23.1 Million for Deceiving Consumers

By Matt Kirkpatrick

On January 3, 2017, the Consumer Financial Protection Bureau (CFPB) ordered Equifax, Inc. and TransUnion and their subsidiaries to pay more than $17.6 million in restitution to consumers and $5.5 million in fines to the CFPB. According to Director Richard Cordray, “TransUnion and Equifax deceived consumers about the usefulness of the credit scores they marketed, and lured consumers into expensive recurring payments with false promises[.]”

TransUnion and Equifax are two of the “big three” national credit reporting agencies that collect consumer credit information, such as current and past creditor information, payment histories, debt load, late payments, collections activity, and bankruptcies. Credit reporting agencies then sell consumer information in the form of credit reports and credit scores, among other products. Lenders and other businesses purchase the credit information and use it to determine whether to lend to or do business with consumers, and on what terms.

The CFPB action found that Equifax and TransUnion violated the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act, first, by falsely representing that the credit scores they marketed and sold to consumers were the same scores that lenders used to make credit decisions. In fact, when making credit decisions, lenders typically did not use the same scores as those sold to consumers. The credit bureaus also violated the Act by falsely marketing their credit scores and services like credit monitoring to consumers as being “free” or costing “$1”. In fact, the products were only free or $1 during a 7- or 30-day trial period. After that, unless consumers cancelled the service during the trial period, Equifax, TransUnion, and their subsidiaries automatically charged recurring monthly fees, typically $16 per month or more.

The CFPB also found that Equifax violated the Fair Credit Reporting Act (FCRA) requirement that each credit bureau provide consumers with a free credit report once each year upon request.

Consumers may request their free credit reports through the Federal Trade Commission website at https://www.ftc.gov/faq/consumer-protection/get-my-free-credit-report. Equifax violated the FCRA by making consumers view Equifax advertisements in order to obtain their reports.

For more information, the CFPB press release is available at:

http://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-transunion-and- equifax-pay-deceiving-consumers-marketing-credit-scores-and-credit-products/.

The full text of the consent order against Equifax is available at: http://files.consumerfinance.gov/f/documents/201701_cfpb_Equifax-consent-order.pdf.

The full text of the consent order against TransUnion is available at:

http://files.consumerfinance.gov/f/documents/201701_cfpb_Transunion-consent- order.pdf.

 


Matt Kirkpatrick
’s practice focuses on consumer litigation, insurance policyholder coverage actions, and financial elder abuse claims.