Consumer Financial Protection Bureau

A little more than a month after rescinding its prior Policy Statement on abusive acts or practices, the Consumer Financial Protection Bureau (CFPB) has brought its first post-rescission abusiveness claim. In a complaint against a debt settlement company, the CFPB alleged that the company’s alleged practice of prioritizing the settlement of debts owed to affiliated lenders constituted an abusive act or practice. The complaint against the company quotes its website as stating that the company’s “‘skilled negotiators work to get your creditors to agree to discounted lump sum payoff amounts’” and quotes its sales scripts as saying that the company is “‘not owned or operated by any of your creditors.’” In reality, according to the complaint, the company’s owner was also the owner of one of the prioritized creditors and the owner of the other prioritized creditor was a former employee of the company’s owner. Taking these facts together, the CFPB alleged that the company violated the prong of the abusiveness prohibition that prohibits acts or practices that take unreasonable advantage of a consumer’s reasonable reliance on a company to act in the interests of the consumer.
Continue Reading Abusiveness: Muddying the Waters

In January, we wrote about the CFPB’s latest lawsuit predicating an alleged federal UDAAP violation on the violation of a state law. The case involves claims against a mortgage lender who allegedly employed individuals working as loan originators, but who were not licensed as loan originators as required by state law. We noted that the

One of the great ironies of the Supreme Court’s decision in Seila Law v. CFPB, in which the Supreme Court held that the Consumer Financial Protection Bureau’s (CFPB) structure was unconstitutional, is that it effectively provided no relief to Seila Law, the party that took the case all the way to the Supreme Court. On remand, the Ninth Circuit held that the CFPB’s case against Seila Law could continue. Now, for the first time, a court has held that a pending CFPB enforcement action must be dismissed because of that constitutional infirmity. On March 26, 2021, a federal district court dismissed the CFPB’s action against the National Collegiate Student Loan Trusts, a series of fifteen special purpose Delaware statutory trusts that own $15 billion of private student loans (the NCSLTs or Trusts), finding that the agency lacked the authority to bring suit when it did; that its attempt to ratify its prior action came too late; and that based on its conduct, the CFPB could not benefit from equitable tolling. In doing so, the court avoided ruling on a more substantial question with greater long-term implications for the CFPB and the securitization industry—whether statutory securitization trusts are proper defendants in a CFPB action.
Continue Reading CFPB Suffers First Loss After Seila Law

On March 11, 2021, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) rescinded its January 24, 2020 Statement of Policy Regarding Prohibition on Abusive Acts or Practices (“Policy Statement”). The Acting Director of the CFPB, David Uejio, has been working quickly to reverse Kraninger-era policies, and the Policy Statement is the latest victim. Under the original Policy Statement, the CFPB said that it would: (1) generally rely on the abusiveness standard to address conduct only where the harm to consumers outweighs the benefit, (2) avoid making abusiveness claims where the claims rely on the same facts that the Bureau alleges are unfair or deceptive, and (3) not seek certain types of monetary relief against a covered person who made a good-faith effort to comply with a reasonable interpretation of the abusiveness standard.

In rescinding the Policy Statement, the CFPB highlighted the Policy Statement failed to (1) provide clarity to regulated entities on the abusiveness standard and (2) prevent consumer harm. In reality, the rescinded guidance is unlikely to have a major impact on the Bureau’s supervisory and enforcement efforts. Below, we highlight key takeaways from the announcement.
Continue Reading CFPB Rescinds Policy Statement on Abusiveness

On February 22, 2021, the Consumer Financial Protection Bureau (CFPB) filed its first lawsuit since the election and the resignation of former Director Kathy Kraninger. The lawsuit alleges that the defendant engaged in deceptive and abusive practices by charging detained immigrants large upfront and monthly fees to arrange for payment of immigration bonds securing the immigrants’ release. The complaint lays out a rather damning set of facts alleging that the defendant misrepresented the nature of its services to consumers, many of whom do not speak English, and then engaged in aggressive collection actions. As the CFPB’s first lawsuit of the Biden administration, it offers some clues as to the direction of CFPB enforcement.
Continue Reading Four Takeaways from the CFPB’s First Lawsuit in the Post-Kraninger Era

With President Joe Biden’s inauguration as the Nation’s 46th President, change is coming to Washington. And that change will be felt quickly and acutely at the Consumer Financial Protection Bureau (CFPB). At President Biden’s request, CFPB Director Kathy Kraninger submitted her resignation on Wednesday, clearing the way for the President to appoint current FTC Commissioner and former CFPB official Rohit Chopra as the next Director of the agency. Given the CFPB’s single Director structure, the new Director will have significant opportunities to shape the direction of the CFPB over the next four years. Below we address what we can expect to see from CFPB under the new administration.
Continue Reading A New Day Dawns at the CFPB

On November 30, 2020, the US Consumer Financial Protection Bureau (CFPB) issued its final Advisory Opinion Policy, along with two Advisory Opinions (AOs) addressing the applicability of the Truth in Lending Act (TILA) to certain earned wage access (EWA) programs and private education loans. The CFPB first proposed a pilot AO program in June 2020.

Consumer financial services providers likely think of state licensing requirements as a state law compliance issue. But the Consumer Financial Protection Bureau (CFPB) views these issues as federal matters as well. In a consent order issued December 8, 2020, the CFPB asserted that an unlicensed debt collector’s threat of suit and actual suit to collect on a debt violated the federal prohibition against deceptive practices. The consent order represents the CFPB’s latest action that essentially federalizes state law violations.
Continue Reading State Licensing and Federal UDAAP – What’s the Connection?

On October 28, 2020, the CFPB’s Private Education Loan Ombudsman published its annual report on student loans, as required by the Dodd-Frank Act. Despite an increased focus on student loans by many state legislatures and regulators and some members of Congress, the report reflects a significant decline in the number of consumer complaints about student loans over the past year. The report analyzes complaints submitted by consumers about student lenders and servicers between September 2019 and August 2020. Notably, the report covers a period during which many student loan borrowers have experienced financial hardships as a result of the COVID-19 pandemic and the federal government – as well as some state governments (in partnership with holders of private student loans) – has offered a myriad of loss mitigation options for eligible student loan borrowers.

Continue Reading 2020 CFPB Student Loan Ombudsman’s Report Shows Significant Trend of Declining Consumer Complaints

We recently received a response to several FOIA requests we had made  to the Consumer Financial Protection Bureau (CFPB or Bureau) regarding various enforcement statistics and processes. Because the CFPB does not make these materials generally available to the public, we share them here. The materials include the Enforcement Policy and Procedures Manual and Consent Order template, and data regarding the number enforcement investigations, opened, closed and pending each fiscal year, and the number of matters referred from supervision to enforcement. 
Continue Reading CFPB: Enforcement Manual and Stats