CFPB auto lending complaints jump 46% in 2023

Consumer complaints submitted to the Consumer Financial Protection Bureau related to vehicle loans and leases increased 46.3% year over year in 2023, fueled by problems with billing and fees as well as fraud. Consumers filed 12,658 complaints tied to auto loans and leases with the CFPB in 2023, according to an Auto Finance News analysis of the CFPB’s complaint database. Vehicle loan and lease complaints accounted for just under 1% of the 1.3 million complaints filed with the CFPB in 2023, down compared with 1.1% of complaints in 2022. Issues with managing a loan or lease were the most prevalent vehicle-related complaints, totaling 4,349. The issues were mostly related to: Billing problems, 1,860 complaints; Problems with fees charged, 795 complaints; and Problems with additional products or services purchased with the loan, 715 complaints. Complaints paint a picture of consumer sentiment toward auto lending and provide regulators with a view of potential issues. The bureau uses the complaint database in part to assign lenders “risk rankings,” John Redding , partner at financial services law firm Alston & Bird , told AFN . “It's one of the tools they use to try and identify both the types of issues that may be worth further review or action, but they look at who these complaints are about,” Redding said. The CFPB looks “to identify topical areas and industry participants who may potentially present an enhanced risk to consumers in their view, and that can result in regulatory supervision or drive investigations .” Using complaint data Lenders should review consumer complaints to identify policies or procedures that may need to be adjusted, Marci Kawski , partner at law firm Husch Blackwell , told AFN . “It's part of [a lender’s] feedback loop,” said Kawski, whose practice focuses on consumer finance companies. “Complaints that are made directly to you, complaints that are made in other sources and complaints that you've received from the CFPB. … Lenders should be taking the complaint seriously from a compliance management system perspective, and if there is CFPB scrutiny [against a lender], they need to be able to show it has been addressed.” Inflation contributes to complaint jump Getting a loan or lease and struggling to pay the loan were the second and third most common CFPB complaints related to auto finance, coming in at 2,232 and 1,929 complaints, respectively, according to the database. -- Complaints about getting a loan or lease included: 762 related to fraudulent loans; 551 related to credit denial; and 275 related to confusing or misleading advertising or marketing. -- Complaints about problems paying loans included: 666 tied to repossession or disablement of vehicle; 617 related to denial of request to lower payment; and 580 related to balances remaining after vehicle is repossessed and sold. The sizable increase in auto-related complaints filed in 2023 does not necessarily mean financial institutions are violating compliance regulations set out by the CFPB, Alston & Bird’s Redding said. Total complaints in the database increased 61% YoY in 2023, according to an AFN analysis. “If you look at the top three categories, managing, getting [a loan] and struggling to pay, ... the increase appears to be largely based on economics,” Redding said. “Inflation and the number of vehicles that were available during COVID has created an environment where vehicles have gotten more expensive.” Consumers and financial institutions believed that the customer taking out the loan could stay current on payments at the point of origination, but economic changes since then shifted the consumer’s ability to pay, he said. “Based on the number [of complaints], it sounds like things have occurred that impact [the consumer’s] ability to stay in the vehicle and make their payments,” Redding said. The number of complaints filed with the CFPB is “very small” when considering the volume of loan and lease transactions that take place, he said. Complaint volume also may be rising as consumer awareness of the complaint database increases, Husch Blackwell’s Kawski said. Compliance in 2024 “The CFPB within the last several months was seeking to hire additional enforcement attorneys, so we may see the same amount of enforcement as there was in 2023, if not a greater amount,” she said. To avoid litigation in 2024, lenders must continually analyze their processes and procedures as well as stay up to date on announcements made by the CFPB, Kawski said. Redding said 2024 could bring on increased enforcement and supervision around credit reporting as well as continual oversight on junk fees. Early-bird registration is now available for the second annual Auto Finance Summit East , which gathers lenders, dealers and fintech innovators in an event designed to bring the power of technology to a cross-section of industry players. Early-bird pricing ends March 15. Visit AutoFinance.Live to learn more.

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