Consumer Finance Report – Common Mistakes Made In The Loan Office

This may be a good time to step back a minute to examine the most common mistakes that we see made by finance companies. I offer the following for your consideration:

Committing a UDAAP (unfair, deceptive or abusive act or practice) such as overselling ancillary products, initially offering and then withdrawing, of a rate that no customer actually qualifies for, spoofing of a customer’s caller ID, making a customer ask before releasing a lien on a car title, refinancing loans without regard for any tangible net benefit to the customer.

Engaging in faulty or false marketing—“bait and switch” advertisements, not making offers to those on a guaranteed offer of credit list, failing to follow state or federal law when advertising triggering terms.

Failing to respect bankruptcy—contacting a customer in violation of the “automatic stay.”

Violating credit reporting standards—reporting information incorrectly or not associated to the correct customer, failure to report disputed accounts as “in dispute,” re-aging incorrect information, failing to respond to a customer’s direct dispute.

Engaging in over-aggressive debt collecting—threatening lawsuits that the company has no intention of filing, in-person visits to a customer (especially at work) after having been told to refrain from doing so, aggressively colleting debts barred by the statute of limitations, incentivizing bad behavior by the collector’s compensation plan, failing to follow FDCPA “guidance” of sections 807, 808 and 812 of the Fair Debt Collection Practices Act notwithstanding that the finance company may not be a “debt collector” within the meaning of that law.

Poor credit decision making—discouraging applicants, requiring spouses as co-signers, using impermissible information in making the credit decision.

Mishandling complaints and disputes—ignoring complaints, failing to respond to a direct dispute letter, thinking that every customer complaint is bogus.

Not treating audits and examinations respectfully—when this attitude prevails, the company is in trouble.

I hope that none of our regular readers are engaging in any of this troubling conduct. If you think your CSRs may be doing so, then I urge you to step in and remind them of their duties and responsibilities.

Maurice L. Shevin

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