UDAAP shark in the water!!

We’ve all seen Jaws and other shark movies. A group of swimmers are enjoying a day at the beach, swimming in the ocean, blissfully unaware of the danger lurking below. The trailers for these movies usually feature an ominous voice saying something to the effect of: “just when they thought it was safe to go in the water…”

There’s a shark that credit unions should watch out for too – no, I’m not talking about a great white or a hammerhead, but rather Unfair, Deceptive, and Abusive Acts and Practices, or UDAAP. Even when it seems that a consumer finance law might not apply to a credit union, UDAAP could be lurking nearby ready to sink its teeth into a credit union that gets too close. Last month, UDAAP emerged from the depths to enforce debt collection practices standards where it had previously seemed safe to tread – i.e., where the FDCPA did not directly apply.

CFPB v. Cash Store

Last month the CFPB announced a consent order with Cottonwood Financial, Ltd., which was doing business as Cash Store – a non-depository lender of title loans, payday loans, and high-interest small dollar loans. The consent order alleged the following debt collection practices: calling some borrowers 15 times or more in one day; calling the borrowers’ friends, family members, and employers; disclosing the existence of the debt to third parties; and calling a borrower’s employer even after being told that continued calls could jeopardize the borrower’s employment.

 

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