ViClarity Compliance Update

DOJ Action on redlining; AI scam affects 2.5 billion Gmail users; CFPB highlights on auto loan practices; and enforcement against mortgage lending discrimination.
 

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Engaging in “Redlining” Lending Practices: DOJ Action
A federal credit union has been subject to an investigation by the U.S. Department of Justice (DOJ) alleging that the credit union engaged in instances of redlining in predominantly Black and Hispanic neighborhoods around Philadelphia. The federal credit union and the DOJ have come to a resolution, which has yet to be approved by the court. If the resolution is approved, this would be the first time the DOJ has had a redlining resolution with a credit union. Credit union staff should be aware of the differences of overt discrimination, disparate treatment, and disparate impact. A credit union’s fair lending policy should include the regulatory definitions of those things along with examples of when those items may occur so that all credit union staff is informed. Read the full article here.
 
AI Scam Affects 2.5 Billion Gmail Users
In a recent scam, an AI hack sent a Google security alert to 2.5 billion Gmail users. The scam centers around the use of adaptive AI which can be used to have “super realistic” conversations. This latest Gmail scam is relatively complex and can catch even the savviest of email users off-guard. The scam works by attempting to convince the target of the scam that their Gmail account has been accessed by a person other than the holder of the Gmail account. The target of the scam will receive an email alerting them to a Gmail account recovery attempt. The target will then receive a follow-up phone call within the next 40 minutes with a phone number that will look like it’s coming from Google. While many people will have ignored the email, the phone call is a troubling follow-up which appears to give some legitimacy to the email. Learn more here.
 
CFPB Publishes Supervisory Highlight on Auto Loan Practices
The Consumer Financial Protection Bureau (CFPB) recently published an edition of Supervisory Highlights, detailing illegal practices in auto financing, including lender repossession practices. The report also included other instances of illegal conduct such as lenders providing inaccurate disclosures, misapplying loan payments, and putting incorrect information on consumers’ credit reports.
 
While the CFPB did not specifically indicate that credit unions were among the lenders categorized as having engaged in these activities, it is a good reminder to be attentive to various regulatory requirements. Credit unions who engage in auto loans should ensure that all policies and procedures are current and in compliance with state and federal regulations. Further, all marketing ads detailing an APR should comply with the requirements of regulation Z and should not be misleading or deceptive. Read more on the topic here.
 
CFPB and DOJ File Consent Order Against Fairway Mortgage for Redlining
The Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) took an enforcement action against Fairway Independent Mortgage Corporation’s (Fairway) for illegal mortgage lending discrimination against majority-Black neighborhoods in the greater Birmingham, Alabama area. According to the CFPB and the DOJ, Fairway engaged in illegally redlining Black neighborhoods, including through its marketing and sales actions. In their allegations, the CFPB and the DOJ assert that Fairway’s actions discouraged people from applying for mortgage loans in the Birmingham metropolitan area’s Black neighborhoods. Full story here.