The CFPB is taking a hard line on wrongful repossessions. In a 2022 bulletin, the bureau characterized the error of wrongful repossession as a criminal theft, stating “No American ever wants to wake up to see their car stolen.” For creditors, such inflammatory statements suggest a zero-tolerance approach, meaning a single erroneous repossession would be detrimental for the lender. But there are steps lenders can take to minimize negative repercussions.
The CFPB recognizes speedy correction and restitution.
No lender wants to wrongfully repossess a vehicle, but the manual nature and complexity of the repossession process will result in mistakes. As a result, lenders of any scale occasionally wrongfully repossess a car. It can happen due to breakdowns at any of several points in the repossession process, from timing issues with posting a payment, not documenting a promise to pay, or failing to close a repossession order after a payment is received, to name a few.
To mitigate agency action when a wrongful repossession occurs, lenders should take the following steps immediately after identifying the error, well before a regulatory examination begins. Every step should be carefully documented to demonstrate their good-faith efforts to rectify the error.
It's important that these steps be executed and documented immediately, with documentation saved in a way that ensures easy retrieval in the future. Relying on memory during an examination that could take place years in the future is ill-advised.
If you are the subject of a CFPB examination in which wrongful repossessions are uncovered, you need to be able to provide documentation evidencing your reasonable and good-faith efforts to restore the consumer, hold staff accountable and correct all internal processes that failed. If the examiner brings additional errors to your attention, resolve them immediately. If you take these steps, and document them well, you might find that the bureau is more reasonable than their rhetoric implies.