The Consumer Financial Protection Bureau is still using “mystery shoppers,” which is why lenders are advised to continue treating each consumer as a potential undercover regulatory agent, said Molly Calkins, partner in the Consumer Financial Services Practice Group at Akerman LLP.
Mystery shoppers are investigators posing as consumers to apply for loans and to test the lender. The CFPB’s first use of “mystery shoppers” was in June 2016, to support an allegation of discrimination. The CFPB and the Department of Justice announced a joint action against BancorpSouth Bank for discriminatory mortgage lending practices that harmed minorities, which was discovered using the “mystery shopper” tactic, according to a press release.
“Yes, they are still using mystery shoppers but they are being mysterious about it,” Calkins told attendees at PowerSports Finance 2017 in late October. “We learned of the BancorpSouth’s [discriminatory] situation because it did come from mystery shopper situation. There may be shoppers among us now and in daily transactions. We might not know about it because investigation might get closed and resolved short of a public enforcement action.”
To that end, it is important for lenders to instruct their representatives to treat each consumer as an undercover regulatory. “That just means sticking to the compliance rules that you have in place, sticking to the processes that you have in place, and treating each consumer carefully,” Calkins said.
It is also important for lenders to “think about how you respond to any kind of request or inquiry, make it as mechanical as possible to minimize the appearance of a judgement call,” added David Gemperle, a partner at Nisen & Elliott.
Watch the panelists discuss other regulatory matters and compliance best practices in the video below — the fourth video in a series from PowerSports Finance 2017, held recently in Las Vegas.