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Consumer Financial Protection Bureau Examination - Module 1: Marketing Explained

Feb 29, 2012 Admin

When the Consumer Financial Protection Bureau audits or reviews a payday or short term lending firm, they will look for a variety of risk factors associated with fraudulent or unethical lending. In the ever-changing world of online short term lending, it is important for companies to know what the Consumer Financial Protection Bureau will look for and to avoid behaviors that could be construed as fraud, abuse or unfair lending, especially in the area of marketing. Here are a few things a lender should be cognizant of at all times.

·         Are all statements made in emails, brochures, ads or signs backed up by actual follow through on the part of the company?


·         Do all marketing statements align with Truth in Lending guidelines?


·         If employees or sales people are offered compensation tied to the number or amount of loans provided, can the compensation be considered a kickback or does the compensation in any way promote the use of unethical lending practices?


·         Do marketing materials comply with Equal Credit Opportunity regulations? Review your mailings, procedure for determining recipients and scripts to ensure there are no hidden discriminatory practices.


·         Is the fine print of every loan clearly disclosed? Ensure your staff is trained to provide a clear explanation of all loan terms and costs and review loan paperwork to ensure all details are documented.


·         If you use a lead generator, ensure that your business partners also follow guidelines, as the Consumer Financial Protection Bureau will also review partner relationships. You should also ensure your business partners maintain confidentiality of information.

If you follow the guidelines for fair lending and ethical financial practices, you can avoid trouble and fines when the Consumer Financial Protection Bureau reviews your company. Audits and reviews from entities like the Consumer Financial Protection Bureau can happen at any time, so you should be prepared through constant vigilance and appropriate processes and procedures.