Civil Investigative Demand

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CFPB Director Kathy Kraninger has filed her first contested lawsuit as CFPB Director.  Somewhat surprisingly, the lawsuit seeks to enforce a Civil Investigative Demand (CID) issued by the CFPB in June 2017—under former Director Richard Cordray—to a debt collection law firm.  The petition to enforce the CID makes clear that the respondent law firm made a “final, partial, redacted production” in response to the CID in September 2017.  Clearly, therefore, this matter was pending at the CFPB throughout the year-long tenure of Mick Mulvaney, during which the agency took no action to enforce the CID. It is dangerous to read too much into this action, but it does suggest that Kraninger may take a more aggressive enforcement posture than Mulvaney, who was criticized for the sharp drop in the number of enforcement actions under his watch.

The CID at issue is a typically broad CFPB CID from that era. It contains 21 interrogatories with dozens of sub-parts, seven requests for written reports, 15 requests for documents, and, unusually, four request for “tangible things,” in this case phone recordings and associated metadata. Read as a whole, the CID seeks information regarding virtually every aspect of the respondent’s debt collection business over a period of three-and-a-half years. The CID’s Notification of Purpose is equally broad and limitless,
Continue Reading Kraninger’s First Lawsuit

The Bureau of Consumer Financial Protection (the “Bureau”) has struck out again in trying to enforce a Civil Investigative Demand (“CID”) that contains broad and generic language about the nature of the agency’s investigation. For the second time, a US Court of Appeals has ruled that a CID issued by the Bureau was invalid because the agency failed to meet the statutory requirement that the CID identify the conduct constituting the alleged violation under investigation and the provision of law applicable to such violation, as required by 12 U.S.C. § 5562(c)(2). As we previously discussed, last year the DC Circuit ruled that a CID that the Bureau issued to a college accrediting agency failed to meet the statutory threshold when it merely identified “unlawful acts and practices in connection with accrediting for profit colleges” as the conduct under investigation. CFPB v. ACICS, 854 F.3d 683 (D.C. Cir. 2017).

Now, a unanimous panel of the Fifth Circuit has followed suit and held that a CID issued to the Source for Public Data, “a company that provides public records to the public through an Internet-based search engine,” is invalid because it uses similarly broad language that does not comply with the statute.
Continue Reading Another One Bites the Dust: BCFP Loses CID Appeal

On January 24, 2018, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) announced that it is seeking public comment on all aspects of its civil investigative demand (“CID”) process. This Request for Information (“RFI”) is the first in a series of RFIs in which the Bureau plans to seek comment on its enforcement, supervision, rulemaking, market monitoring, and education activities.

The RFI comes on the heels of Acting Director Mick Mulvaney’s announcement that the CFPB will no longer “push the envelope” when it comes to enforcement.  Consistent with that sentiment, the RFI explains that the CFPB is “especially interested in better understanding how its processes related to CIDs may be updated, streamlined, or revised to better achieve the Bureau’s statutory and regulatory objectives, while minimizing burdens.” Because responding to the CFPB’s CIDs has often proved to be an arduous and costly endeavor, this RFI is likely to be a welcome opportunity for many regulated entities.
Continue Reading CFPB Requests Comments on Civil Investigative Demand Process

The Consumer Financial Protection Bureau (CFPB) recently posted its Enforcement Policy and Procedures Manual (Manual) on its FOIA reading room website.  This is a welcome step in transparency, which was driven by the agency’s receipt of multiple FOIA requests for the Manual.  Other documents available in the FOIA reading room relating to the agency’s…

In an email to staff, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray announced on Wednesday, November 15, that he will be stepping down this month.  His departure was widely anticipated.  Because the CFPB is headed by a single director – as opposed to a 5-member commission – the agency’s director wields enormous power. Below we address some of the most frequently asked questions regarding Director Cordray’s resignation.
Continue Reading CFPB Director Richard Cordray to Step Down

Dealing the Consumer Financial Protection Bureau (CFPB) another setback, on April 21, 2017, the DC Circuit Court of Appeals refused to enforce a Civil Investigative Demand (CID) issued by the CFPB. The decision is likely to have broad implications for how the CFPB identifies the nature and scope of its investigations in its CIDs, which …

On January 20, the Ninth Circuit handed the Consumer Financial Protection Bureau (CFPB) a victory in one of the first cases challenging the CFPB’s investigative authority — although that victory seems tied to the particular facts of the case.

The court held that the CFPB has the authority to investigate the activities of for-profit, small-dollar lenders created by three Indian tribes (the Tribal Lending Entities). Given the unique facts of the case, however, the decision may provide scant guidance for the other pending cases challenging the CFPB’s authority to issue administrative subpoenas known as Civil Investigative Demands (CIDs).

The case before the Ninth Circuit involved CIDs issued to the Tribal Lending Entities as part of an investigation into whether small-dollar online lenders were violating federal consumer financial laws. Unlike the other pending challenges to the CFPB’s investigative authority, the Tribal Lending Entities did not claim that the nature of their activities (lending money) was outside the scope of the CFPB’s authority. Instead, they argued that the CFPB’s investigative powers – which are limited to sending CIDs to “persons” – did not authorize the agency to send such demands to tribal entities. The Ninth Circuit disagreed.
Continue Reading Ninth Circuit Affirms CFPB Authority to Investigate Tribal Lenders

The Consumer Financial Protection Bureau (CFPB) recently proposed changes to its rules governing confidential information. The proposed rules would restrict recipients of civil investigative demands (CIDs) from voluntarily disclosing the receipt of a CID, while at the same time giving the CFPB more leeway to disclose confidential supervisory information to other government agencies. The proposed…

The Consumer Financial Protection Bureau (CFPB) marks its fifth birthday having made a substantial mark on the consumer financial services marketplace. To mark this event, we have compiled a retrospective of the CFPB’s first five years. The retrospective provides an overview of the CFPB’s actions in the realms of rulemaking, supervision, and enforcement. While it …

The Consumer Financial Protection Bureau (CFPB) has teed up another D.C. Circuit battle regarding the scope of its authority. On Monday, June 13, the CFPB filed a notice of appeal of the district court’s decision to dismiss the CFPB’s petition to enforce a Civil Investigative Demand (CID) issued to the Accrediting Council for Independent Colleges…