Financial Trade Groups Say CFPB Lacks Authority to Collect Auto Lending Data

The CFPB contends there are significant gaps in the available lending data it needs

The Consumer Financial Protection Bureau does not have the authority to collect data on auto loans, a coalition of financial services trade groups, including America’s Credit Unions, wrote in a letter to the agency this week.

“The Bureau is not a research institute; it exists to safeguard consumers, and its data collection must be in service of that goal,” the groups wrote. “The contrary position, that the Bureau may collect data unrelated to its own rulemaking, enforcement, and other activities, would give the Bureau nearly unbounded discretion to demand data.”

The CFPB is proposing to annually collect data from lenders that originated more than 20,000 loans in the previous calendar year. The agency also proposes to collect limited data from lenders that originated more than 500 loans and fewer than 20,000 in the previous calendar year.

“The Dodd-Frank Wall Street Reform and Consumer Protection Act charges the CFPB with monitoring for risks to consumers in the offering or provision of consumer financial products or services, including developments in markets for such products or services,” the agency said, in announcing its proposal in January “The CFPB has previously researched and documented significant gaps in available auto finance data.”

The trade groups, including the American Bankers Association, the Consumer Bankers Association and the U.S. Chamber of Commerce contend that the agency has not said why it needs the data. “Remarkably, the Bureau has failed to explain in the Notice the rationale behind its necessity for this substantial volume of information or the specific issue it aims to address through this data collection,” the groups wrote.

The groups asked the CFPB to abandon the information collection because the agency does not have the legal authority to collect it and because the bureau “grossly underestimates” the burden connected with the collection of the data.

Consumer groups endorsed the CFPB proposal, saying that “Publicly available data is minimal and often excludes important portions of the marketplace and important details of the transactions—details that reveal the performance of the credit market in allowing consumers to affordably and safely buy a car, as well as risks to consumers.”

Those consumer groups, including the Center for Responsible Lending and the National Consumer Law Center, wrote in a comment letter that the threshold for reporting loan activity should be lower in an effort to capture more of the auto lending market.