Page 6 - MIADA-Q4-2021

THE CARLAWYER ©

The CARLAWYER ©

By Eric Johnson, Partner, Hudson Cook, LLP, Editor in Chief of CounselorLibrary.com’s Spot Delivery®

Here’s our monthly article on selected legal the special rule for residential mortgage
developments we think might interest debt that may be used when disclosing Agencies Issue Final Rule Requiring
the auto sales, finance, and leasing world. the required validation information, and Notification of Significant Computer-

This month, the developments involve the a document addressing how to disclose Security Incidents. On November 18,
Consumer Financial Protection Bureau, certain validation information in an the OCC, FRB, and FDIC issued a final
Office of the Comptroller of the Currency, “Itemization Table” when using the model rule imposing notification requirements
Federal Reserve Board and Federal Deposit validation notice. The CFPB also recently on banking organizations and their bank
Insurance Corporation. As usual, our issued FAQs on “limited-content messages” service providers when a significant
article features the “Case(s) of the Month” and the call frequency provisions of the computer-security incident has occurred.
and our “Compliance Tip.” Note that this Debt Collection Rule. The final rule requires a banking
column does not offer legal advice. Always organization to notify its primary federal
check with your lawyer to learn how what CFPB Issues Advisory Opinion on CRA regulator of any significant computer-
we report might apply to you or if you have Matching Procedures. On November security incident as soon as possible
questions. 4, the CFPB issued an advisory opinion and no later than 36 hours after the
addressing the matching procedures banking organization determines that a
FEDERAL DEVELOPMENTS that consumer reporting agencies use to computer-security incident has occurred.
match information to consumers. The Notification is required for incidents that
CFPB Announces New Hires. On October advisory opinion reminds CRAs, including have materially affected or are reasonably
29, the CFPB announced that Lorelei Salas background screening companies, that likely to materially affect the viability of
will be joining the Bureau as Assistant their procedures to match information they a banking organization’s operations, its
Director for Supervision Policy and as the receive to the correct consumer in preparing ability to deliver banking products and
Acting Assistant Director for Supervision consumer reports must comply with their services, or the stability of the financial
Examinations and that Eric Halperin will obligation to “follow reasonable procedures sector. In addition, the final rule requires
be joining as Assistant Director for the to assure maximum possible accuracy” a bank service provider to notify affected
Office of Enforcement. under Section 607(b) of the Fair Credit banking organization customers as soon
Reporting Act and that the practice of name- as possible when the provider determines
CFPB Releases Guidance on only matching (i.e., matching information to that it has experienced a computer-security
Implementation of and Compliance the particular consumer who is the subject incident that has materially affected or
with Debt Collection Rule’s Validation of a consumer report based solely on is reasonably likely to materially affect
Information Requirements. The CFPB whether the consumer’s first and last names banking organization customers for four or
recently released guidance documents are identical or similar to the first and last more hours. Compliance with the final rule
to help industry implement and comply names associated with the information, is required by May 1, 2022.
with the Debt Collection Rule’s validation without verifying the match using additional
information requirements. The Debt identifying information for the consumer) is CASE(S) OF THE MONTH
Collection Rule requires debt collectors not a reasonable procedure.
to provide consumers with certain Court Denied Arbitration of Car Buyer’s
information to help them identify the CFPB Releases Report on Consumer Individual Claims Against Assignee of RIC
debt being collected. This “validation Credit Report Disputes. As part of a series Based on Waiver and Denied Arbitration
information” consists of information about of reports on consumer credit trends, the of His Class Action Claims Based on
the debt, information about the consumer’s CFPB released “Disputes on Consumer Arbitration Agreement’s Wording: A car
protections and rights during collection of Credit Reports,” which examines how buyer entered into a retail installment
the debt, and information to facilitate the disputes can appear in credit record data, contract in connection with his used
consumer’s ability to exercise those rights. the characteristics of consumers who have car purchase. After the buyer defaulted,
The Debt Collection Rule details how a disputes appear in their credit reports, and the assignee of the RIC repossessed and
debt collector can provide the validation what happens to accounts that have been sold the car and then sued the buyer to
information in a validation notice. The reported as being in dispute. The report recover the deficiency balance. The buyer
CFPB’s most recent guidance on the uses data on auto financing, student loan, answered and filed a counterclaim alleging
Debt Collection Rule includes a Spanish general-purpose credit card, and retail that the assignee violated the Uniform
translation of the model validation notice, a card accounts that were opened between Commercial Code by not selling the car
new section of the rule’s FAQs that addresses 2012 and 2019. These four types of credit in a commercially reasonable manner
the use of the model validation notice, a new have the largest share of accounts that had and by not giving appropriate notice.
section of the rule’s FAQs that addresses dispute flags during the sample period. The assignee answered the counterclaim

6 | MIADA MISSISSIPPI DEALER Q4 2021