Dodd-Frank News Center

Banking Committee holds hearing on CFPB’s semiannual report

This story appeared in Bank Digest.                                   

The Senate Banking Committee held a hearing entitled “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress” on Oct. 17, 2019. The committee received the testimony of CFPB Director Kathy Kraninger on the Bureau’s recent semiannual report to Congress, as required by the Dodd-Frank Act. The report covers the period beginning Oct. 1, 2018, and ending March 31, 2019.

According to a prepared opening statement by Committee Chairman Mike Crapo (R-Idaho), the report “outlines the Bureau’s significant work” during that period, including rulemakings and supervisory and regulatory activities, and “provides insight into what the CFPB plans to undertake in the coming work period.”

House files Supreme Court motion to defend for-cause removal provision for CFPB director

This story appeared in Bank Digest.                                   

Speaker of the House Nancy Pelosi (D-Calif) and House Financial Services Committee Chairwoman Maxine Waters (D-Calif) have announced a filing by the House of Representatives with the Supreme Court in support of the independence of the Consumer Financial Protection Bureau. As described in Pelosi's press release, the House's motion in Seila Law LLC v. CFPB to file an amicus brief follows a recent announcement by Consumer Financial Protection Bureau Director Kathy Kraninger that the Bureau would no longer defend the constitutionality of the for-cause removal provision regarding the CFPB director, which is designed to provide a degree of independence to the agency and to prevent the President from removing the director at will.

The release said the Justice Department has also urged the Supreme Court to consider the case in order to strike down the for-cause removal protection for the CFPB director.

CFPB and South Carolina sue brokers of high-interest credit offers

This story appeared in Bank Digest.                                     

The Consumer Financial Protection Bureau and the South Carolina Department of Consumer Affairs have filed a lawsuit against Katharine Snyder, Performance Arbitrage Company, Inc., and Life Funding Options, Inc. The Bureau said the companies, which are owned and operated by Snyder, brokered contracts offering high-interest credit to veterans, many of whom are disabled, and to other consumers. The Bureau alleges that the companies and Snyder violated the Consumer Financial Protection Act’s prohibition against deceptive acts or practices.     

The complaint seeks an injunction against Snyder and her companies, redress to consumers, and the imposition of a civil money penalty.

CFPB sues Maryland debt collection entities and CEO over alleged FCRA, FDCPA violations

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau has filed a lawsuit against FCO Holding, Inc., and its subsidiaries, Fair Collections & Outsourcing, Inc.; Fair Collections & Outsourcing of New England, Inc.; and FCO Worldwide, Inc., as well as Michael E. Sobota, the chief executive officer, president, director, and owner of FCO Holding, Inc. All of the entities are Maryland-based debt collectors that operate collectively under the names Fair Collections & Outsourcing and FCO, the Bureau said.

The Bureau alleges that FCO violated the Fair Credit Reporting Act, Regulation V, and the Consumer Financial Protection Act by, among other things, failing to establish or implement reasonable written policies and procedures regarding the accuracy and integrity of the information it furnished to consumer reporting companies, specifically with respect to its handling of indirect disputes. The Bureau also alleges that FCO and Sobota violated the Fair Debt Collection Practices Act when FCO represented that consumers owed certain debts when FCO did not have a reasonable basis for such assertions.

The Bureau's complaint seeks an injunction, as well as damages, redress, disgorgement of alleged ill-gotten gains, and the imposition of a civil money penalty.                            

 

CFPB Files Amicus Brief in CFPA Case

This story appeared in Bank Digest.                         

The Consumer Financial Protection Bureau has filed an amicus brief in the case of Commonwealth of Pennsylvania v. Navient Corp., et al. This case concerns the authority of states to enforce the Consumer Financial Protection Act's prohibition against unfair, deceptive, or abusive acts or practices. The CFPA requires states bringing such actions to notify the CFPB, but the Bureau argued in its amicus brief that nothing in the relevant CFPA section, either explicitly or implicitly, prohibits a state from bringing an action that is parallel to one that the Bureau has already brought.

CFPB issues latest edition of ‘Supervisory Highlights’

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has issued its latest edition of “Supervisory Highlights,” which includes examination findings in the areas of automobile loan origination, credit card account management, debt collection, furnishing, and mortgage origination that were generally completed between December 2018 and March 2019 (unless otherwise stated). The CFPB said the information in the report is disseminated to help institutions better understand how the Bureau examines institutions for compliance with the requirements of relevant laws and regulations.

In addition, the report does not impose any new or different legal requirements, and all violations described in the report are based only on the particular facts and circumstances reviewed by the Bureau as part of its examinations.

CFPB files amicus brief in FDCPA case regarding language used on envelopes

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau has issued an amicus brief in the case of Preston v. Midland Credit Management, Inc.. This case concerns the Fair Debt Collection Practices Act's prohibition of a debt collector's use of any language or symbol other than the collector's address—and the collector's business name if it does not indicate the individual is in the debt collection business—on any envelope when communicating with a consumer by "use of the mails" or telegram.

The U.S. Court of Appeals for the Seventh Circuit invited the Bureau to file an amicus brief on: (1) whether there is a benign language exception to this prohibition and, if so; (2) whether the phrase "TIME SENSITIVE DOCUMENT" falls within that exception as a matter of law.

The Bureau argued that there is no benign language exception but clarified that the FDCPA permits debt collectors to include language or symbols on an envelope that facilitate making "use of the mails," such as a USPS barcode. The Bureau further argued that if the court did adopt a benign language exception, then whether "TIME SENSITIVE DOCUMENT" would fall within that exception would be a question of fact.

Brown and Murray request briefing from CFPB Student Loan Ombudsman Cameron

This story appeared in Bank Digest.                                   

Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) and Senate Health, Education, Labor, and Pensions Committee Ranking Member Patty Murray (D-Wash) have sent a letter to Consumer Financial Protection Bureau Student Loan Ombudsman Robert Cameron requesting answers regarding how he will carry out his duties in his new role. They expressed concerns over “potential conflicts of interest” due to his prior work on behalf of the student loan servicing industry, including his work for the Pennsylvania Higher Education Assistance Authority, which the senators said had “a troubling legal and regulatory history.”

In their letter, Brown and Murray went on to say, “As Deputy Chief Counsel for the Pennsylvania Higher Education Assistance Authority (PHEAA), you were responsible for the company’s compliance with federal and state law. During your tenure, however, PHEAA had a poor compliance record, as reflected in the number of borrower complaints and allegations of violations of federal and state consumer protection law.”

The senators requested that Cameron provide a briefing to staff of their respective committees regarding their concerns.

Nationwide debt collector settles CFPB charges

This story appeared in Bank Digest.                                   

Financial Credit Service, Inc., an Illinois-based debt collector that engages in collections across the nation under the name Asset Recovery Associates, Inc., has agreed to settle Consumer Financial Protection Bureau charges that its collection tactics violated the Fair Debt Collection Practices Act and Consumer Financial Protection Act. According to the Bureau, the company threatened to sue consumers, have them arrested, garnish their wages, or place liens on their homes even though it did not intend to do so. The company also told consumers that the debts would harm their credit ratings, even thought it did not make reports to consumer reporting agencies. Additionally, the company misrepresented that employees were attorneys, the CFPB said.

Under the settlement agreement, the company will pay a $200,000 civil penalty and at least $36,800 in restitution to victimized consumers.

 

Velázquez, Porter urge FSOC to oversee tech giants

This story appeared in Bank Digest.                                   

Rep. Nydia M. Velázquez (D-NY) and Rep. Katie Porter (D-Calif) have written to the Treasury Secretary, as head of the Financial Stability Oversight Council (FSOC), encouraging the FSOC to consider designating the three leading cloud-based computing storage providers for the financial industry as systemically important financial market utilities (SIFMUs) in light of the data breach at Capital One Financial Corporation, which exposed the personal information of approximately 106 million Capital One credit card customers and applicants. The personal data of millions of Americans that Capital One was storing was being hosted in a cloud provided by Amazon Web Services, and was breached by a former Amazon employee. The letter calls on the FSOC to consider designating Amazon Web Services, Microsoft Azure and Google Cloud as SIFMUs under the Title VIII of the Dodd-Frank Act. A SIFMU designation would subject the tech firms to enhanced oversight by the Federal Reserve Board to ensure a cloud failure of a leading financial institution would.