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Stephen Lilley

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The Consumer Financial Protection Bureau (“CFPB”) announced a Request for Information (“RFI”) about alternative data on February 16, 2017, seeking insights into the benefits and risks of using unconventional financial data in assessing a consumer’s creditworthiness. On the same day, the CFPB held a hearing in Charleston, West Virginia, inviting consumer groups, industry representatives, and others to comment on the use of alternative data.

The CFPB estimates that 45 million Americans have difficulty getting a loan under traditional underwriting criteria, because they do not have a sufficient credit history. According to the CFPB, the use of alternative data may support those Americans’ creditworthiness and allow them better access to financing at more affordable rates. Alternative data includes sources such as timely payment of rent, utilities, or medical bills, as well as bank deposit records, and even internet searches or social media information—data that credit bureaus do not traditionally consider. However, a consumer who lacks a credit history but who makes timely rent and utility payments may be as likely to repay a loan as another consumer with a higher credit score. Continue Reading CFPB Calls for Comment on Alternative Data

The Consumer Financial Protection Bureau’s (CFPB) use of its “substantial assistance” authority is becoming a common way for the agency to go after parties that might otherwise escape its reach. After not using this tool at all in its first three-and-half years of existence, the CFPB has now started to bring such claims with increasing frequency. The CFPB has brought ten substantial assistance cases, charging both counterparties of entities alleged to have engaged in unfair, deceptive or abusive acts or practices (UDAAPs) and individual owners and managers of such entities. Based on its enforcement actions to date, the CFPB apparently intends to use substantial assistance claims both as a fallback if other claims fail and to extend its jurisdictional reach where other theories are unavailable. But key questions remain, including what the CFPB must establish under the provision’s scienter requirement, what constitutes substantial assistance, what violations may form the predicate of a substantial assistance claim, and how substantial assistance liability interacts with other limitations on CFPB authorities. Read more about the CFPB’s substantial assistance cases in Mayer Brown’s Legal Update, available here.

 

A modern business conference phone, close-up of speaker unit

On March 2, 2016, the Consumer Financial Protection Bureau (CFPB) undertook its first data security enforcement action in a consent order against Dwolla, Inc., a payment network provider that allegedly made deceptive representations about its data security practices. The consent order makes clear that, going forward, consumer financial services companies will have to navigate another set of regulatory expectations as they work to secure consumer data against cyber threats.

On April 21, 2016, from 11:00 a.m. – 11:30 a.m. EDT, please join Mayer Brown lawyers Ori Lev, Stephen Lilley and David Tallman for a discussion of the CFPB’s Dwolla enforcement action and its implications for the consumer financial services sector.  Further information and a link for registration can be found here.

The hearing before the U.S. Court of Appeals for the D.C. Circuit in PHH Corp. v. Consumer Financial Protection Bureau on April 12 was a tale of two arguments.

The presentation on behalf of PHH was relatively uneventful: its counsel (Ted Olson) was asked a limited number of questions in roughly 25 minutes at the podium, with at least five minutes passing before the first question was posed. In contrast, counsel for the CFPB (Larry Demille-Wagman) was kept at the podium for a solid 40 minutes and subjected to a steady stream of tough questions.

While it is hard to predict based on the oral argument how the Court of Appeals will rule, including whether the Court will reach the constitutional questions it previously raised, today’s argument suggests that the CFPB may well be on track for its first major litigation defeat. Continue Reading U.S. Court of Appeals for the D.C. Circuit Sharply Questions CFPB At Oral Argument In PHH Corp. v. CFPB

The structure of the Consumer Financial Protection Bureau (CFPB), which is headed by a single director who is removable only for cause, has been the subject of criticism and attack since the agency’s inception. To date, legal challenges focusing on the agency’s structure have not succeeded. Now, however, the federal court of appeals in the District of Columbia appears to be taking up the issue. A panel of that court issued an order on Monday raising questions about the Bureau’s constitutionality. A decision that the CFPB’s structure is unconstitutional could have widespread ramifications for the agency in the years to come.

The case is PHH Corp. v. Consumer Financial Protection Bureau, which involves a challenge to a $109 million sanction imposed by CFPB Director Richard Cordray for asserted violations of the Real Estate Settlement Procedures Act (RESPA). Continue Reading D.C. Circuit Panel Raises Questions Regarding The Constitutionality of the CFPB