CFPB moves to curb ‘improper’ car repossessions

As the secondary auto market continues its brisk pace, the Consumer Financial Protection Bureau issued a compliance bulletin to help prevent “improper” repossessions.

As the secondary auto market continues its brisk pace, the Consumer Financial Protection Bureau issued a compliance bulletin to help prevent “improper” repossessions.

The report outlines conduct observed during CFPB examinations and enforcement actions, including the illegal seizure of cars, lax record keeping, unreliable balance statements and ransom for personal property.

Amid a global chip shortage, the prices for both new and used cars have skyrocketed, increasing the risk of illegal repossessions, the CFPB said. 

The agency also expressed concern that both the total amount of car loan debt and the average loan size will continue to increase, even after prices start to fall. In January prices for used cars and trucks had risen 40 percent from a year prior, according to the Consumer Price Index, while prices for new cars rose 12 percent in that time. Auto loans are currently the third largest consumer credit market at over $1.4 trillion outstanding, double the amount from 10 years ago, the bureau said.

“With today’s high car prices, auto lenders and investors might be tempted to seize vehicles for resale in the hot used car market,” said CFPB Director Rohit Chopra. “No American ever wants to wake up to see their car stolen. Auto loan servicers need to ensure that every repossession is lawful.”

Fredrikson & Byron Law