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2022 Getting it Right published

The 2022 edition of the Guide to HMDA Reporting: Getting it Right! has been made available at


Mutli-state auto dealer settles suit by FTC and Illinois

The Federal Trade Commission has announced that the Commission and the State of Illinois have taken action against the North American Automotive Services, Inc. a/k/a Ed Napleton Automotive Group, a large, multistate auto dealer group based in Illinois, for sneaking illegal junk fees for unwanted “add-ons” onto customers’ bills and for discriminating against Black consumers by charging them more for financing. Napleton will pay $10 million to settle the lawsuit brought by the FTC and the State of Illinois, a record-setting monetary judgment for an FTC auto lending case.

The complaint alleges that eight of Napleton's dealerships and the general manager of two Illinois dealerships illegally tacked on junk fees costing consumers hundreds or even thousands of dollars for unwanted “add-on” products such as payment insurance and paint protection.

According to the complaint, the dealerships would often wait until the end of the hours-long negotiation process to sneak junk fees for add-on products and services into consumers’ purchase contracts, which often run as long as 60 pages. These junk fees were often added despite consumers specifically declining the add-ons or having confirmed prices that did not include the add-ons. In other cases, the consumers were falsely told the add-ons were free or were a requirement to purchase or finance their vehicle.

The complaint also alleges that the Napleton dealerships discriminated against Black consumers in connection with financing vehicle purchases. Napleton employees had wide latitude to increase the cost of a consumer’s loan by increasing the amount paid in interest or adding add-ons to the final contract. According to the complaint, Black customers at the dealerships were charged approximately $190 more in interest and paid $99 more for similar add-ons than similarly situated non-Latino White customers.

Under the terms of the proposed settlement with the FTC and the State of Illinois, $9.95 million of the $10 million judgment will be used to provide monetary relief to consumers, and $50,000 will be paid to the Illinois Attorney General Court Ordered and Voluntary Compliance Payment Projects Fund. The settlement will also the require the defendants to establish a comprehensive fair lending program that, among other components, will cap the additional interest markup they can charge consumers. The settlement also requires the defendants to charge consumers only with express, informed consent, and prohibits them from misrepresenting the cost or terms to buy, lease, or finance a car, or whether a fee or charge is optional.


OCC issues CRA evaluations for 23 institutions

The Office of the Comptroller of the Currency has released a list of CRA performance evaluations that became public in March. Of the 23 national banks and federal savings associations listed, 21 received ratings of Satisfactory.

We congratulate these two banks that received Outstanding ratings:


Fed issues prohibition order to former Texas bank lender

The Federal Reserve Board of Governors has issued an Order of Prohibition against Chad Dingler, a former assistant vice president and loan officer of Citizens State Bank, Tyler, Texas, having found that, between 2015 and 2018, Dingler instructed staff to execute approximately 62 unauthorized cash advances for 22 revolving credit line customers and to provide the proceeds directly to him, then misappropriated the funds for his own use, causing the bank to suffer a loss of $41,833 (later reimbursed) plus legal and reputational risks.


OFAC targets DPRK weapons organization

On Friday, April 1, 2022, the Treasury Department announced that OFAC had sanctioned five entities for providing support to the Democratic Peoples Republic of Korea's (DPRK’s) development of weapons of mass destruction and ballistic missile programs in violation of multiple United Nations Security Council resolutions. Today’s action targets a DPRK weapons of mass destruction research and development organization that is directly linked to the development of the DPRK’s ICBMs, along with four of its revenue generating subsidiaries.

OFAC designated the DPRK Ministry of Rocket Industry (MoRI) pursuant to E.O. 13382 for being owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, North Korea's Munitions Industry Department. MoRI has worked with overseas representatives from other DPRK organizations in order to support MoRI procurement goals.

Additionally, OFAC designated four MoRI trading companies — Hapjanggang Trading Corporation, Korea Rounsan Trading Corporation, Sungnisan Trading Corporation, and Unchon Trading Corporation — for being owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, MoRI.

For additional identification information on the five entities designated on Friday, see the BankersOnline April 1, 2022 OFAC Update.


FDIC Consumer Compliance Supervisory Highlights

The FDIC has posted its Spring 2022 Consumer Compliance Supervisory Highlights, This issue includes observations during 2021:

  • A description of the most frequently cited violations and other consumer compliance examination observations, which focused on
    • Regulation E—Liability protections for a consumer deceived into giving authorization credentials
    • Automated overdraft programs—Conversion from static limit to dynamic limit
    • Re-presentment of unpaid transactions—Heightened risk for Section 5 (UDAP) violations
    • Fair lending
  • Information on regulatory developments;
  • A summary of consumer compliance resources and information available to financial institutions; and
  • An overview of consumer complaint trends.

Consumer Compliance Supervisory Highlights features articles of interest to the banking industry. Its purpose is to enhance transparency regarding the FDIC’s consumer compliance supervisory activities and provide a high-level overview of consumer compliance issues identified through the FDIC’s supervision of state non-member banks and thrifts. Topics include supervisory observations related to consumer protection laws, examples of practices that may be useful to institutions in mitigating risks, regulatory developments, consumer compliance resources, and an overview of consumer complaint trends.


Treasury targets sanctions evaders and Russian tech companies

Yesterday, the Treasury Department announced that OFAC has designated 21 entities and 13 individuals as part of its crackdown on the Kremlin’s sanctions evasion networks and technology companies, which are instrumental to the Russian Federation’s war machine. Treasury has also determined that three new sectors of the Russian Federation economy are subject to sanctions pursuant to Executive Order 14024. This allows Treasury impose sanctions on any individual or entity determined to operate or have operated in any of those sectors.

OFAC also designated Russian government malicious cyber actors.

For identification of the individuals and entities targeted by OFAC and related information on OFAC's actions, see the BankersOnline March 31, 2022, OFAC Update.


SEC 2022 exam priorities

The Securities and Exchange Commission’s Division of Examinations has announced its 2022 examination priorities, including several significant areas of focus and many perennial risk areas. The Division will focus on private funds, environmental, social and governance (ESG) investing, retail investor protections, information security and operational resiliency, emerging technologies, and crypto-assets.

The Division publishes its examination priorities annually to provide insights into its risk-based approach, including the areas it believes present potential risks to investors and the integrity of U.S. capital markets.


FDIC updates Consumer Compliance Exam Manual

The FDIC has updated seven sections of its Consumer Compliance Examination Manual. The following sections of the Manual were revised this month:

  • II-14.1 — SOURCE Violation Codes
  • V-1.1 — Truth in Lending Act
  • V-7.1 — Equal Credit Opportunity Act (ECOA) Regulation
  • V-10.1 — Consumer Leasing
  • VI-1.1 — Expedited Funds Availability Act
  • XI-1.1 — Community Reinvestment Act
  • XI-5.1 — Wholesale/Limited Purpose Institution


CFPB sanctions student loan servicer Edfinancial

On Wednesday, the CFPB announced it has sanctioned Edfinancial Services LLC for making deceptive statements to student loan borrowers and misrepresenting their forgiveness and repayment options to them. The Bureau reported that Edfinancial deceived borrowers with Federal Family Education Loan Program (FFELP) loans about their eligibility for Public Service Loan Forgiveness (PSLF), and found that Edfinancial violated the Consumer Financial Protection Act by engaging in deceptive acts and practices.

The Bureau has ordered the company to contact all affected borrowers, provide them with accurate information, and pay a $1 million civil money penalty.

Edfinancial is a small, rapidly growing student-loan servicer headquartered in Knoxville, Tennessee. Edfinancial markets itself to borrowers and the public as providing expert help in navigating complex student-loan repayment options, and Edfinancial’s customer representatives regularly field questions about PSLF and other types of loan cancellation programs.

The Department of Education's limited PSLF waiver, announced in October 2021, extended benefits to FFELP borrowers. Under the waiver, any past payment on a federal student loan by a borrower working in public service can count toward PSLF, regardless of payment plan, loan type, or whether the payment was made in full or on-time. This includes payments on FFELP loans. To benefit under the waiver, many borrowers will need to act by consolidating their loans, filing a PSLF application, or both, before the waiver ends on October 31, 2022.

Last month, the Bureau warned servicers not to misrepresent borrower eligibility or make deceptive statements about the PSLF program and the waiver. Yesterday, the Department of Education released a letter to FFELP servicers raising concerns that deceptive practices regarding FFELP borrowers’ eligibility for PSLF might be widespread. The letter warns FFELP servicers of additional oversight on these issues and reminds them to ensure that they are actively informing borrowers of the availability of federal debt relief programs and any changes to those programs and responding to borrower inquiries with complete information.


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