Defend My Debt

CFPB Issues Guidance to Protect Mortgage Borrowers from Pay-to-Play Digital Comparison-Shopping Platforms
Financial arrangements that influence or manipulate search results are illegal
WASHINGTON, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) issued an advisory opinion to protect Americans from double dealing on digital mortgage comparison-shopping platforms. Companies operating these digital platforms appear to shoppers as if they provide objective lender comparisons, but may illegally refer people to only those lenders paying referral fees. When shoppers use a lender that is not the best option for their needs, they may end up with a lower quality lender or paying thousands more in closing costs or interest. The advisory opinion outlines how companies violate the Real Estate Settlement Procedures Act (RESPA) when they steer shoppers to lenders by using pay-to-play tactics rather than providing shoppers with comprehensive and objective information.
“Given the rise in mortgage interest rates, it is even more important for homebuyers to shop and compare loan offers,” said CFPB Director Rohit Chopra. “We are working to ensure that online platforms are not manipulating their search results in order to coerce kickbacks from lenders.”
Over the last year, mortgage interest rates have risen substantially. People looking for the best deal on mortgages or other settlement services often are turning to comparison-shopping platforms and mobile apps. Many of the websites and applications claim to offer ranked lists of providers suitable to the individual consumer’s needs. After providing their personal data to an online site to get access or run a customized search, people reasonably expect a neutral and fair presentation of the providers that may best meet their mortgage or other settlement needs.
Under RESPA, it is illegal for companies and individuals, including digital comparison-shopping platforms, to receive kickbacks and referral fees in connection with a transaction involving a residential mortgage or other real estate settlement service. Eliminating illegal kickback schemes fosters fair competition by forcing lenders and other providers to compete on a level playing field and leads to lower rates and higher quality service.
Today’s advisory opinion seeks to assist law-abiding companies to comply with existing law. It does not create any new requirements, but rather offers clarity on how firms can navigate issues associated with digital mortgage comparison-shopping platforms. It describes how these companies may violate RESPA, and potentially other laws, if they coerce payments from mortgage professionals, unlawfully steer consumers, or engage in other illegal referral activities, including:
• Presenting one or more service providers in a non-neutral way: The platform’s operator presents lenders based on extracted referral payments rather than the shopper’s personal data or preferences or other objective criteria. For example, the operator presents a lender as the best option because that lender pays the highest referral fee. However, the shopper is led to believe the lender was selected based on their shared personal data or preferences. In one variation, digital mortgage comparison-shopping platforms may receive payments from lenders to rotate them as the top presented option regardless of whether the highlighted lender is the best fit for the shopper.
• Biasing the platform’s internal formula to favor preferred providers: The platform’s inputs or formula are manipulated to generate comparison options favoring higher-paying or preferred providers. For example, a platform’s formula is designed to steer shoppers to use providers in which the operator has a financial stake. In this case, the shopper is unaware that the platform’s formula was potentially designed to steer them away from non-preferred providers.
The Consumer Financial Protection Act of 2010 transferred authority for RESPA to the CFPB from the Department of Housing and Urban Development (HUD). This advisory opinion supplements guidance HUD provided in 1996 on early versions of comparison-shopping platforms, which the CFPB continues to apply. The CFPB will enforce RESPA to protect consumers and to ensure a robust, competitive mortgage market. Today’s advisory opinion also follows a set of Frequently Asked Questions regarding RESPA published in 2020 to help entities understand their obligations under current law.
Read the advisory opinion, Real Estate Settlement Procedures Act (Regulation X); Digital Mortgage Comparison-Shopping Platforms and Related Payments to Operators.
Read Director Chopra’s Statement on Mortgage Comparison Shopping in a Time of Higher Interest Rates.
Learn about the CFPB’s tools and resources for homebuyers.
The CFPB established the Advisory Opinion program in 2020 to provide guidance to companies about how existing federal consumer financial protection law applies to emerging market trends and business practices.
Consumers can submit complaints about mortgage and other financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).
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The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit consumerfinance.gov.

CFPB and New York Attorney General Sue Credit Acceptance for Hiding Auto Loan Costs, Setting Borrowers Up to Fail
Major subprime auto lender targets Americans with loans that it predicts they cannot afford to repay

WASHINGTON, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) and the New York State Office of the Attorney General sued a predatory auto lender, Credit Acceptance Corporation, for misrepresenting the cost of credit and tricking its customers into high-cost loans on used cars. The car-buying experience turns into a nightmare for many of Credit Acceptance’s borrowers, who face unaffordable monthly payments, vehicle repossessions, and debt collection lawsuits. The joint complaint alleges that, among other things, Credit Acceptance hides costs in loan agreements and sets consumers up to fail. The complaint also alleges that Credit Acceptance violated New York usury limits and other consumer and investor protection laws. The lawsuit seeks to force Credit Acceptance to stop its illegal practices, reimburse harmed consumers, pay back wrongfully earned gains, and pay a penalty.
“Credit Acceptance obscured the true cost of its loans to car buyers, leading to severe financial distress for borrowers and subjecting them to aggressive debt collection tactics on loans its own systems predicted that borrowers can’t afford to repay,” said CFPB Director Rohit Chopra. “The CFPB and the New York Attorney General seek to halt Credit Acceptance's illegal practices and make consumers whole.”
“CAC claimed to help low-income New Yorkers purchase cars, but instead, drove them straight into debt,” said New York Attorney General Letitia James. “CAC steered hardworking New Yorkers onto a path of financial ruin by tricking them into unaffordable, high-interest auto loans while cutting backroom deals with dealers to increase their own profits. These predatory actions hurt innocent people and left them with mountains of debt. I thank the CFPB for their partnership to stop this harm and protect everyday New Yorkers.”
Credit Acceptance (NASDAQ:CACC) is an indirect auto lender headquartered in Southfield, Michigan that funds and services used-car loans for people with low credit scores. Credit Acceptance is one of the country’s largest publicly traded auto lenders and does business with a network of more than 12,000 affiliated used-car dealers. From November 2, 2015 to April 30, 2021, approximately 1.9 million people obtained used car loans through Credit Acceptance and its affiliated dealers. In 2020 alone, consumers obtained more than $4.9 billion in Credit Acceptance-financed loans. The company’s loans typically carry very high interest rates.
Specifically, the company allegedly harmed consumers by:
• Hiding the true cost of credit: Since 2014, Credit Acceptance’s loan agreements nationwide have said that consumers would pay interest at an average 22% APR. However, the true cost of credit offered is far higher than what borrowers are told. This is because Credit Acceptance’s business model pushes dealers to manipulate the prices of vehicles sold to Credit Acceptance borrowers, based on borrowers’ projected performance. This increases the principal balance of the loans. By hiding the true cost of the credit in inflated principal balances, Credit Acceptance evades state interest rate caps and deprives consumers of the ability to make informed decisions, to compare financing options, or to avoid high interest charges.
• Setting up borrowers to fail: Credit Acceptance ensured its own profits by providing loans without regard to whether borrowers could afford them. For almost 4 out of 10 loans, Credit Acceptance predicted that it would not be able to collect the full amount financed by the loan. Credit Acceptance profits even when borrowers are unable to pay their loans in full by using aggressive debt collection methods. As a result of Credit Acceptance’s practices, customers faced late fees, repossessions, auctions, post-repossession collection efforts, lawsuits, and ruined credit profiles.
• Closing its eyes to practices that harmed consumers: The company created financial incentives for dealers to add extra products to loans and then shrugged off whether customers were misled into thinking the add-on products were required. Add-on products, such as vehicle service contracts, are a profit center for Credit Acceptance. They represented about $250 million in revenue in 2020 alone.
When borrowers default on loans, it can lead to severe consequences, including wage garnishment and an inability to borrow money in the future. A default on an auto loan can also lead to the borrower losing their means of transportation, which can cause job loss and a further spiral of damaged credit and financial distress.
This is not the only action targeting Credit Acceptance for violation of consumer financial protection laws. For example, last year, the Massachusetts Attorney General secured more than $27 million for thousands of families harmed by Credit Acceptance.
Enforcement Action
Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial protection laws, including engaging in unfair, deceptive, or abusive acts or practices. The CFPB is seeking injunctive relief, monetary relief for consumers, disgorgement of unjust gains, and a civil money penalty.
Over the last decade, the CFPB has consistently partnered with states across the country to enforce federal and state consumer financial protections. Federal law authorizes state attorneys general and state regulators to enforce certain provisions of the Consumer Financial Protection Act. State enforcers can also bring their own claims under state law, including violations of state usury limits.
The complaint is not a final finding or ruling that the defendants have violated the law.
Read today’s complaint.
Auto loans are the third largest category of outstanding consumer debt, after mortgages and student loans. In recent years, the cost of vehicles has risen substantially, leading to increased borrowing. Over the last year, the CFPB has increased its monitoring of the auto lending market. The CFPB is also exploring ways to enhance the availability of data about the market.
Consumers can submit complaints about auto loan products, and about other financial products and services, by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).
Employees who believe their companies have violated federal consumer financial protection laws are encouraged to send information about what they know to [email protected]. To learn more about reporting potential industry misconduct, visit the CFPB’s website.
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The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit consumerfinance.gov.

What you should know about tech support scams
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By Lisa Schifferle – JAN 12, 2021
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During the pandemic, we’re doing more online – working, connecting with family and friends, shopping, and banking. So, if something goes wrong with your device, you want to fix it right away. Scammers are preying on this, offering phony tech support services. Here’s what you should know about tech support scams.

How to spot tech support scams
Scammers take advantage of your reasonable concerns about viruses and other threats, but their real goal isn’t to protect your computer. Instead, they want to sell you useless services, steal your credit card number, or install malware, which lets them see everything on your computer.

How do you know if you’re being scammed? Here are three common scenarios:

Scenario #1: Unsolicited call from tech support
You get a call from someone who says he’s a computer technician. Maybe he claims to be from a well-known company. He says there are viruses or other malware on your computer to trick you into giving him remote access to your computer or buying software you don’t need. He may ask you to pay by gift card or wire transfer.

Scenario #2: Unknown pop-up appears on your screen
A pop-up window appears on your computer screen with a message warning of a security issue on your computer and tells you to call a phone number to get help. The person who answers may pretend to run a diagnostic test and claim to identify more problems.

Scenario #3: Unsolicited email about a suspended account
You get an email saying your account has been suspended. In a recent twist, scammers are sending emails saying your Zoom account has been suspended or you missed a meeting. If you click on the link, it will install malware allowing the scammers to see what’s on your computer.

How to avoid tech support scams
Here are four tips to protect against tech support scams:

Never give control of your computer to someone who contacts you out of the blue. Criminals can spoof phone numbers, so you can’t rely on Caller ID. Avoid giving anyone you don’t know access to your computer, or your credit card information.
Don’t click links in unsolicited pop-ups or emails. If an unknown pop-up appears on your screen, avoid clicking on any links. The same is true for unsolicited emails. Instead, navigate to the company’s site by typing in their URL.
Maintain your anti-virus software. Use trusted anti-virus security software and make sure to update it regularly.
Recognize legitimate tech companies. Legitimate companies won’t contact you by phone, email or text message to say there’s a problem with your computer. Security pop-up warnings from real tech companies won’t ask you to call a phone number.
Act quickly if you’ve been scammed
If you’ve been scammed and you paid by credit or debit card, contact your credit card company or bank to ask them to stop the transaction. If you paid with a gift card, immediately contact the company that issued the card , and tell them you paid a scammer and ask if they can refund your money.

You should also report any tech support scams to the Federal Trade Commission at reportfraud.ftc.gov .

For more information on fraud and scams, download the CFPB and FDIC’s Money Smart for Older Adults resource guide.