Bureau of Consumer Financial Protection (CFPB) – Page 2

Key Takeaways From the CFPB’s and DOJ’s Redlining Settlement With Hudson City Savings Bank

Sep 25 2015

On Thursday, September 24, 2015, the CFPB and DOJ filed a complaint and proposed consent order against Hudson City Savings Bank (“Hudson City”) alleging violations of the Equal Credit Opportunity Act and Fair Housing Act. The complaint alleges that Hudson City discriminated against Black and Hispanic borrowers by redlining majority-Black-and-Hispanic neighborhoods (defined in the consent order as a census tract in which more than 50 percent of the residents are identified in the 2010 U.S. Census as either “Black or African American” or “Hispanic or Latino”) in its residential mortgage lending in New York, New Jersey, and Pennsylvania. The complaint alleges that Hudson City engaged in redlining through its (1) location of branches and loan officers, (2) exclusion of Black and Hispanic census tracts from its Community Reinvestment Act (“CRA”) assessment area, (3) use of brokers outside of majority Black and Hispanic neighborhoods, (4) marketing directed at neighborhoods with relatively few minority residents, and (5) exclusion of residents from majority-minority counties from discounted home improvement loans for borrowers with low to moderate incomes.

In Win for CFPB, Federal Court Clarifies Scope of “Substantial Assistance” and “Service Provider” Provisions of Dodd-Frank Act

Sep 08 2015

In the first court decision to opine on the “service provider” and “substantial assistance” provisions of the Dodd-Frank Act, a federal district court in Georgia denied a motion to dismiss brought by payments processors who had been sued by the Consumer Financial Protection Bureau (“CFPB”) for their role in an alleged phantom debt collection scheme. The decision addresses two novel areas of the CFPB’s jurisdiction – its ability to enforce the prohibition against unfair, deceptive, and abusive acts and practices (“UDAAPs”) against “service providers,” and its ability to go after those individuals and entities that “knowingly or recklessly provide substantial assistance” to the commission of a UDAAP. While grounded in the specific facts pled in the CFPB’s detailed complaint, the opinion nevertheless provides insight into how the federal courts may interpret these provisions, and serves as a warning sign to companies about the importance of implementing robust compliance programs.

Some Lessons from the CFPB’s Springstone Enforcement Action

Aug 25 2015

Last week, the Consumer Financial Protection Bureau (CFPB) announced a settlement with Springstone Financial, LLC, for deceptive practices related to enrolling consumers in deferred-interest credit products. Springstone administered a health-financing program through which consumers could finance various medical treatments, including dental treatments. Consumers could apply for credit either through Springstone’s website or at their medical provider’s office. In the case of the latter, the health care providers’ staff — who were trained and monitored by Springstone — would provide consumers with application materials and assist them in filling out the application before submitting it to Springstone on consumers’ behalf. The CFPB’s claim centered on these providers. “In some cases,” according to the CFPB, dental staff allegedly told consumers that the deferred-interest product was a no-interest loan and failed to mention that a 22.98 percent interest rate would apply from the date of the loan if the loan balance was not paid in full by the end of the promotional period. The CFPB found these practices deceptive and determined that more than 3,200 consumers “may have been” affected by them. As a result, Springstone was ordered to provide $700,000 in restitution to the 3,200 consumers who ended up paying deferred interest on a loan they applied for with a health-care provider’s assistance. The CFPB did not assess a civil money penalty.

Happy Birthday, CFPB!

Jul 21 2015

By: Stephanie Robinson, Anjali Garg

While the Dodd-Frank Act turns five, today marks the fourth birthday of the CFPB. Despite a controversial start between recess appointments and enforcement attorneys at examinations, the CFPB has come a long way since its inception. The Bureau has brought more than 90 enforcement actions, filed numerous complaints, and obtained countless supervisory agreements in its four short years. It has expanded its regulatory reach through the newly implemented mortgage servicing rules and nonbank supervisory program. Just recently, the CFPB issued its first agency decision in a contested administrative proceeding, resulting in a disgorgement figure nearly 17 times the amount originally recommended in the proceeding. The CFPB has fundamentally changed the consumer finance landscape through its regulatory, enforcement, and supervisory activities. Here we highlight a few ways that the CFPB has made a difference in the areas of nonbank supervision; consumer complaints; unfair, deceptive, and abusive acts and practices; and individual liability.

Federal District Court Upholds CFPB Claims Against Debt Collection Law Firm But Rejects Open-Ended Statute of Limitations Arguments

Jul 17 2015

On July 14, 2015, the U.S. District Court for the Northern District of Georgia denied defendants’ motion to dismiss the Consumer Financial Protection Bureau’s (CFPB) claims in CFPB v. Frederick J. Hanna & Associates. The CFPB’s complaint in this case alleges that the defendants, a law firm and its principals, operate “less like a law firm than a factory” that files tens of thousands of collection cases each year. The complaint alleges that the defendants filed over 350,000 collection suits each year, but that attorneys spend less than a minute reviewing and approving each suit. The CFPB’s complaint alleges that the lack of attorney involvement constitutes a violation of the Fair Debt Collection Practices Act’s (FDCPA) and the Consumer Financial Protection Act’s (CFPA) prohibitions on deceptive practices because the collections actions filed by the defendants represented to consumers that attorneys were meaningfully involved in filing those actions when in fact they were not. The CFPB’s complaint also alleges that the defendants’ use of affidavits in which affiants represented they had personal knowledge of the validity and ownership of the debts violated these same statutes.

New CFPB/DOJ Enforcement Action Incentivizes Indirect Auto Lenders to Limit Discretionary Dealer Markups

Jul 16 2015

On July 14, 2015, the Consumer Financial Protection Bureau (“CFPB”) and the U.S. Department of Justice (DOJ) announced a joint settlement of allegations that American Honda Finance Corporation (“Honda”), an indirect auto lender associated with the car manufacturer of the same name, violated the federal Equal Credit Opportunity Act by discriminating against African-American, Hispanic, and Asian and Pacific Islander borrowers in the pricing of auto loans. Notably, the terms of the CFPB’s consent order may indicate how indirect auto lenders in the future can avoid the most onerous financial penalties associated with allegedly unlawful pricing practices.

CFPB PUBLISHES NEW SUPERVISORY HIGHLIGHTS

Jun 24 2015

By: Melanie Brody, Ernest Simons

On June 23, the Consumer Financial Protection Bureau (CFPB or Bureau) released its latest Supervisory Highlights, outlining key findings from supervisory work completed between January and April 2015. Recent supervisory resolutions across all industries have resulted in remediation of approximately $11.6 million to more than 80,000 consumers. The report highlights recent supervisory observations in the following areas:

CFPB Issues Final Decision in In Re: PHH Corp.: First Agency Decision in Contested Administrative Proceeding

Jun 24 2015

Earlier this month, the Consumer Financial Protection Bureau (CFPB) issued the Director’s final decision in the CFPB’s enforcement action against PHH Corp. (PPH). The decision is the agency’s first ruling in a contested administrative proceeding and sheds light on how the agency—at least under the leadership of Director Richard Cordray—will approach these matters. Most strikingly, Director Cordray overturned several key rulings by the Administrative Law Judge (ALJ), resulting in a decision requiring PHH to pay over $109 million in disgorgement, nearly 17 times as much as the $6.4 million recommended by the ALJ.

CFPB Releases its 2014 Fair Lending Report

May 05 2015

By: Melanie Brody, Anjali Garg

On April 28, the CFPB issued its third Fair Lending Report, highlighting fair lending developments from calendar year 2014. The CFPB reports that in 2014, its fair lending supervisory and public enforcement actions resulted in $224 million in remediation to approximately 303,000 consumers. The CFPB referred 15 matters to the Department of Justice in the areas of mortgage lending, auto finance, unsecured consumer lending and credit cards, and student lending. DOJ declined to open an independent investigation in five of those matters.

CFPB Targets Pre-Dispute Arbitration Agreements in Consumer Financial Services Contracts in New Report to Congress

Mar 16 2015

By: Andrew C. Glass, Robert W. Sparkes, Roger L. Smerage

In the wake of the Great Recession, numerous federal government actors have sought to limit, and in some cases, eliminate, the inclusion of pre-dispute arbitration agreements in consumer financial services contracts. For instance, in 2010, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), Congress amended the federal Truth-in-Lending Act to prohibit the use of pre-dispute arbitration provisions in residential mortgage contracts and home-equity line-of-credit agreements. See 15 U.S.C. § 1639c(e)(1). Now, acting pursuant to a mandate provided by the Dodd-Frank Act, see 12 U.S.C. § 5518(a), the Consumer Financial Protection Bureau (“CFPB”) has joined the hunt. On March 9, 2015, the CFPB issued a report to Congress that appears to put the use of such agreements in all consumer financial services agreements – including credit card, checking account, and payday loan agreements – in the agency’s cross-hairs.

Tag:Bureau of Consumer Financial Protection (CFPB)