CFPB Deputy Enforcement Director Discusses Enforcement Priorities
On August 22, C. Hunter Wiggins, the CFPB’s Deputy Enforcement Director for Policy and Strategy, spoke to the D.C. Bar Antitrust and Consumer Law Section at a session titled “The Consumer Financial Protection Bureau’s Enforcement Priorities.” A summary of his remarks and responses to certain questions follows.
Mr. Wiggins began his presentation by noting that the Bureau did not want to be a “reactive” agency that devotes its limited resources to “cleaning up” after past crises. Instead, his team, which reports to the CFPB’s Director of Enforcement, Kent Markus, is responsible for evaluating and setting strategic priorities that will allow the Bureau to be a proactive organization.
The Bureau has 150 employees in its Office of Enforcement, seven of whom are on the Policy and Strategy Team. In addition, the Enforcement Office has several “Issue Teams,” which include members of the Policy and Strategy team and other Enforcement staff. Each of the “Issue Teams” is focused on one particular market, such as mortgage servicing or credit cards, and is responsible for identifying problems in those markets that should be prioritized for enforcement action. The criteria used include: (1) the number of consumers potentially impacted by a practice; (2) the period of time that practice has been in place (including whether the practice is ongoing); (3) the amount of harm to consumers; (4) whether the practice targets a vulnerable population; (5) whether consumers have the ability to avoid the practice through shopping; (6) whether the practice results in market distortions (such as a “race to the bottom” or competitive harm to legitimate businesses that do not engage in the practice); and (7) barriers to other solutions (such as the lack of a private right of action).
The Bureau allocates its enforcement resources as follows:
- Core Work (50%): This consists of the priority areas in which the Bureau carries out what were described as its “cop on the beat” responsibilities. Each area generally receives a pro rata amount of resources, but this can vary over time. The areas include: (1) auto finance; (2) consumer loans; (3) credit cards; (4) credit reporting; (5) debt collection; (6) debt relief; (7) deposit accounts; (8) fair lending; (9) money services / prepaid cards; (10) mortgage origination; (11) mortgage servicing; (12) payday loans; and (13) student lending.
- Emphasized Priorities (25-35%): Two to four specific, systemic market problems are chosen. As an example, Mr. Wiggins pointed to the Bureau’s actions regarding credit card add-on products over the past year, which he said were prioritized due to the scope of their impact.
- Emerging and Cross-Cutting Priorities (15%): These are new products, services, or markets, or in some cases new aspects of older products and services that may have an impact on a particular population. As an example, Mr. Wiggins referred to the Bureau’s recent action regarding the use of military allotments to collect payments on auto loans made to servicemembers.
- Tactical Priorities (0-10%): These are activities that are useful to the Bureau’s own long-term institutional development. For example, Mr. Wiggins noted areas where the Bureau has sought out partnerships with other agencies to establish or strengthen enforcement relationships with other regulators or law enforcement agencies. Other possible tactical priorities mentioned included pursuing enforcement matters with a regional focus and increasing the Bureau’s ability to use temporary restraining orders as an enforcement tool.
Question and Answer Session
Mr. Wiggins noted that his responses to questions, which are discussed below, represented his own views and not those of the Bureau.
- RESPA enforcement: Mr. Wiggins was asked if the Bureau was looking at title agents for RESPA compliance. He responded that, in setting priorities, the Bureau focuses on identifying problems, not industries.
- Add-on products: Mr. Wiggins was asked why the Bureau identified credit card add-on products as an “Emphasized Priority” when those products were already receiving significant attention from other regulators. Mr. Wiggins acknowledged the actions of other regulators but said that the Bureau’s review led them to view this as an area where they needed to step in.
- Regulating attorneys: A concern was raised regarding the extent to which the Bureau could regulate the activities of attorneys. Mr. Wiggins responded that, as general matter, the Bureau has no interest in intervening in circumstances where attorneys are merely providing legal advice to clients. However, he noted two Bureau enforcement actions involving potentially problematic attorney conduct: first, a 2012 action against a California law firm allegedly engaged in unfair and deceptive practices related to loan modifications; and second, this week’s suit against a debt-settlement firm that allegedly partnered with attorneys to collect prohibited upfront fees for debt relief services.
- Criminal activity: In response to a question, Mr. Wiggins stated that the Bureau was legally obligated to turn over information regarding suspected criminal activity uncovered during its examinations and investigations to the Department of Justice (DOJ) and that the Bureau has a memorandum of understanding with DOJ for that purpose. However, he emphasized that the CFPB’s examiners and investigators do not look for criminal conduct, such as tax evasion, in the regular course of their duties.
- Employee incentive programs: Mr. Wiggins was asked about the use of employee incentive programs in the area of debt collection. He responded that incentive programs can be problematic to the extent they encourage employees to engage in improper conduct and that the Bureau takes this into account.