The Consumer Financial Protection Bureau (CFPB) has released a bulletin that reminds financial institutions that they may be held responsible for the actions of the third-party vendors they employ for products and services.
According to the CFPB, using outside vendors can ‘pose additional risks’ that may result in the violation of consumer financial protection laws or weaken internal controls that would lead to potential harm to consumers. The CFPB insists that it wants to ‘ensure that consumers are protected from irresponsible service providers and that banks and nonbanks are contracting with honest third parties.’
‘Consumers are at a real disadvantage because they do not get to choose the service providers they deal with – the financial institution does,’ says CFPB Director Richard Cordray. ‘Consumers must not be hurt by unfair, deceptive or abusive practices of service providers. Banks and nonbanks must manage these relationships carefully and can be held accountable if they break the law.’
The CFPB bulletin is available online.