InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
D.C. Circuit says CFPB’s Prepaid Rule does not mandate model disclosures for payment companies
On February 3, the U.S. Court of Appeals for the D.C. Circuit reversed a district court’s decision that had previously granted summary judgment in favor of a payment company and had vacated two provisions of the CFPB’s Prepaid Rule: (i) the short-form disclosure requirement “to the extent it provides mandatory disclosure clauses”; and (ii) the 30-day credit linking restriction. As previously covered by InfoBytes, the company sued the Bureau alleging, among other things, that the Bureau’s Prepaid Rule exceeded the agency’s statutory authority “because Congress only authorized the Bureau to adopt model, optional disclosure clauses—not mandatory disclosure clauses like the short-form disclosure requirement.” The Bureau countered that it had authority to enforce the mandates under federal regulations, including the EFTA, TILA, and Dodd-Frank, and argued that the “EFTA and [Dodd-Frank] authorize the Bureau to issue—or at least do not foreclose it from issuing—rules mandating the form of a disclosure.”
The district court concluded, among other things, that the Bureau acted outside of its statutory authority, and ruled that it could not presume that Congress delegated power to the agency to issue mandatory disclosure clauses just because Congress did not specifically prohibit it from doing so. Instead, the Bureau can only “‘issue model clauses for optional use by financial institutions’” since the EFTA’s plain text does not permit the Bureau to issue mandatory clauses, the district court said. The Bureau appealed, arguing that both the EFTA and Dodd-Frank authorize the Bureau to promulgate rules governing disclosures for prepaid accounts, and that the decision to adopt such rules is entitled to deference. (Covered by InfoBytes here.) However, the Bureau maintained that the Prepaid Rule “does not make any specific disclosure clauses mandatory,” and stressed that companies are permitted to use the provided sample disclosure wording or use their own “substantially similar” wording.
In reversing and remanding the ruling, the appellate court unanimously determined that because the Bureau’s Prepaid Rule does not mandate “specific copiable language,” it is not mandating a “model clause,” which the court assumed for purposes of the opinion that the Bureau was prohibited from doing. While the Prepaid Rule imposes formatting requirements and requires the disclosure of certain enumerated fees, the D.C. Circuit stressed that the Bureau “has not mandated that financial providers use specific, copiable language to describe those fees.” Moreover, formatting is not part of a “model clause,” the appellate court added. And because companies are allowed to provide “substantially similar” disclosures, the appellate court held that the Bureau has not mandated a “model clause” in contravention of the EFTA. The appellate court, however, did not address any of the procedural or constitutional challenges to the Bureau’s short-form disclosures that the district court had not addressed in its opinion, but instead directed the district court to address those questions in the first instance.
9th Circuit orders district court to reassess $7.9 million civil penalty against payments company
On January 27, the U.S. Court of Appeals for the Ninth Circuit ordered a district court to reassess its decision “under the changed legal landscape since its initial order and opinion” in an action concerning alleged misrepresentations made by a bi-weekly payments company. The Bureau filed a lawsuit against the company in 2015, alleging, among other things, that the company made misrepresentations to consumers about its bi-weekly payment program when it overstated the savings provided by the program and created the impression the company was affiliated with the consumers’ lender. In 2017, the district court granted a $7.9 million civil penalty proposed by the Bureau, as well as permanent injunctive relief, but denied restitution of almost $74 million sought by the agency. (Covered by InfoBytes here.) The company appealed the district court’s conclusion that it had engaged in deceptive practices in violation of the Consumer Financial Protection Act, while the Bureau cross-appealed the district court’s decision to deny restitution. The 9th Circuit consolidated the appeals for consideration.
During the pendency of the cross-appeals, the U.S. Supreme Court issued a decision in 2020 in Seila Law LLC v. CFPB, in which it determined that the director’s for-cause removal provision was unconstitutional but was severable from the statute establishing the Bureau (covered by a Buckley Special Alert). Following Seila, former Director Kathy Kraninger ratified several prior regulatory actions (covered by InfoBytes here), including the enforcement action brought against the company. At issue in the company’s appeal is whether the Bureau has authority to pursue its claims, including whether the agency’s funding mechanism is unconstitutional and whether its case is distinguishable from other actions and is entitled to dismissal for the Bureau director’s unconstitutional for-cause removal provision.
The appellate court declined to offer a position on these issues, and instead left them for the district court to consider. The 9th Circuit noted that since the district court’s 2017 order, “sister circuit courts have split” on the funding issue. “We vacate the district court’s order and remand, allowing it to reassess the case under the changed legal landscape since its initial order and opinion,” the appellate court wrote, directing the district court to “provide further consideration to [the company’s] argument on the constitutionality of the Bureau’s funding mechanism.” With respect to the Bureau’s appeal of the restitution denial, the 9th Circuit remanded the case to allow the district court to consider the effect CFPB v. CashCall and Liu v. SEC may have on the action (covered by InfoBytes here and here), as well as whether the agency “waived its claim to legal restitution by characterizing it only as a form of equitable relief before the district court.”
Respondents urge Supreme Court to wait on CFPB funding review
On January 13, respondents filed a brief in opposition to a petition for a writ of certiorari filed by the CFPB last November, which asked the U.S. Supreme Court to review whether the U.S. Court of Appeals for the Fifth Circuit erred in holding that the Bureau’s funding structure violates the Appropriations Clause of the Constitution (covered by InfoBytes here). The Bureau also asked the Supreme Court to consider the 5th Circuit’s decision to vacate the agency’s 2017 final rule covering “Payday, Vehicle Title, and Certain High-Cost Installment Loans” (Payday Lending Rule or Rule) on the premise that it was promulgated at a time when the Bureau was receiving unconstitutional funding. The Bureau requested that the Supreme Court review the case during its current term, which would ensure resolution of the issue by the summer of 2023. Last December, a coalition of state attorneys general from 22 states, including the District of Columbia, filed an amicus brief supporting the Bureau’s petition for a writ of certiorari, while 16 states filed an amicus brief opposing the petition (covered by InfoBytes here).
In their opposition brief, the respondents urged the Supreme Court to deny the Bureau’s petition on the premise that the 5th Circuit’s decision does not warrant review—“let alone in the expedited and limited manner that the Bureau proposes”—because the appellate court correctly vacated the Payday Lending Rule, which, according to the respondents, has “multiple legal defects, including but not limited to the Appropriations Clause issue.” Among other things, the respondents argued that the Bureau erroneously contended that the Appropriations Clause does not limit the manner in which Congress may exercise its authority, claiming that: (i) the Appropriations Clause ensures Congressional oversight of the federal fiscal and executive power; (ii) the Bureau’s funding statute nullifies Congress’s appropriations power in an unprecedented manner; (iii) the Bureau’s merit defenses, including claims that text, history, and precedent support its funding scheme, all fail; and (iv) the Bureau’s remedial defenses of the Payday Lending Rule also fail.
The respondents also maintained that the case “is neither cleanly presented . . . nor ripe for definitive resolution at this time,” and argued that the Supreme Court could address the validity of the Payday Lending Rule without addressing the Bureau’s funding issue. Explaining that the 5th Circuit’s decision “simply vacated a single regulation that has never been in effect,” the respondents claimed that the appellate court should have addressed questions about the Rule’s validity before deciding on the Appropriations Clause question. The respondents claimed that the appellate court incorrectly rejected two antecedent grounds for vacating the Payday Lending Rule: (i) the Rule’s “promulgation was tainted by the removal restriction later held invalid in Seila Law” (covered by a Buckley Special Alert); and (ii) the Rule exceeds the Bureau’s authority “because the prohibited conduct falls outside the statutory definition of unfair or abusive conduct.” “Given the significant prospect that this Court will be unable to resolve the constitutional question in this case, it should await a better vehicle,” the respondents wrote, adding that “[i]f and when some judgment in some future case has ‘major practical effects,’ [] the Bureau should seek this Court’s review then—which may well present a better vehicle.”
Further, the respondents stated that if the Supreme Court grants review of the case, it “should proceed in a more deliberative fashion than the Bureau has urged.” The respondents asked the Supreme Court to expressly include the antecedent questions by either granting the respondents’ cross-petition or adding them to the Board’s petition in order to provide clarity about whether the Supreme Court intends to consider the alternative grounds. They further urged the Supreme Court to wait until next term to review the case, writing that the Bureau “cannot justify its demand for a case of this complexity and importance to be briefed, argued, and decided in a few months at the end of a busy Term.”
9th Circuit reverses decision in COPPA suit
In December, the U.S. Court of Appeals for the Ninth Circuit reversed and remanded a district court’s decision to dismiss a suit alleging that a multinational technology company used persistent identifiers to collect children’s data and track their online behavior surreptitiously and without their consent in violation of the Children’s Online Privacy Protection Act (COPPA). According to the opinion, the company used targeted advertising “aided by sophisticated technology that delivers curated, customized advertising based on information about specific users.” The opinion further explained that “the company’s technology ‘depends partly on what [FTC] regulations call ‘persistent identifiers,’ which is information ‘that can be used to recognize a user over time and across different Web sites or online services.’” The opinion also noted that in 2013, the FTC adopted regulations under COPPA that barred the collection of children’s “persistent identifiers” without parental consent. The plaintiff class claimed that the company used persistent identifiers to collect data and track their online behavior surreptitiously and without their consent, and alleged state law claims arising under the constitutional, statutory, and common law of California, Colorado, Indiana, Massachusetts, New Jersey, and Tennessee, in addition to COPPA violations. The district court ruled that the “core allegations” in the third amended complaint were squarely covered, and preempted, by COPPA.
On appeal, the 9th Circuit considered whether COPPA preempts state law claims based on underlying conduct that also violates COPPA’s regulations. To determine this, the appellate court examined the language of COPPA’s preemption clause, which states that state and local governments cannot impose liability for interstate commercial activities that is “inconsistent with the treatment of those activities or actions” under COPPA. The opinion noted that the 9th Circuit has long held “that a state law damages remedy for conduct already proscribed by federal regulations is not preempted,” and that the statutory term “inconsistent” in the preemption context refers to contradictory state law requirements, or to requirements that stand as obstacles to federal objectives. The appellate court stated that it was not “persuaded that the insertion of ‘treatment’ in the preemption clause here evinces clear congressional intent to create an exclusive remedial scheme for enforcement of COPPA requirements.” The opinion noted that because “the bar on ‘inconsistent’ state laws implicitly preserves ‘consistent’ state substantive laws, it would be nonsensical to assume Congress intended to simultaneously preclude all state remedies for violations of those laws.” As such, the appellate court held that “COPPA’s preemption clause does not bar state-law causes of action that are parallel to, or proscribe the same conduct forbidden by, COPPA. Express preemption therefore does not apply to the children’s claims.”
CFPB says ruling on funding structure doesn’t affect debt collector’s CID
In December, the CFPB denied a petition by a debt collection agency to set aside a civil investigative demand (CID) issued last October. The company challenged the Bureau’s authority to issue the CID on the grounds that the agency’s funding mechanism is unconstitutional. The company’s argument relied on a decision issued by the U.S. Court of Appeals for the Fifth Circuit on October 19 (covered by a Buckley Special Alert), which found that the Bureau is unconstitutionally funded and vacated the CFPB’s Payday Lending Rule. The Bureau submitted a petition for a writ of certiorari in November asking the U.S. Supreme Court to review the 5th Circuit decision (covered by InfoBytes here).
The debt collection agency and the CFPB held a “meet and confer” at the end of October, and the company argued that during the meet and confer the parties did not agree on two of the company’s objections: (i) the inadequate Notification of Purpose Pursuant to 12 C.F.R. §1080.5 contained in the CID; and (ii) the Bureau’s unconstitutional funding mechanism. The company filed a petition to set aside the CID, arguing that because the Bureau’s funding mechanism is unconstitutional, the Bureau lacks enforcement authority and the CID should be set aside in its entirety. The company claimed a similar nexus exists between the Bureau’s unconstitutional funding mechanism and the concrete harm suffered by the company. Just as the Payday Lending Rule was vacated by the 5th Circuit and set aside as unenforceable, “but for the Bureau’s unconstitutional spending, the CID would not have been issued,” the company said.
In rejecting the company’s arguments, the Bureau commented that it “has consistently taken the position that the administrative process … for petitioning to modify or set aside a CID is not the proper forum for raising and adjudicating challenges to the constitutionality of the Bureau’s statute.” In declining to set aside the CID on constitutional grounds, the Bureau wrote that should it later determine that it is necessary to obtain a court order compelling compliance with the CID, the company will have an opportunity to raise any constitutional arguments as a defense in district court.
States have their say on CFPB funding
Recently, a coalition of state attorneys general from 22 states, including the District of Columbia, filed an amicus brief supporting the CFPB’s petition for a writ of certiorari, which asked the U.S. Supreme Court to review whether the U.S. Court of Appeals for the Fifth Circuit erred in holding that the Bureau’s funding structure violates the Appropriations Clause of the Constitution. A separate coalition of 16 state attorneys general filed an amicus brief opposing the Bureau’s position and supporting the 5th Circuit’s decision, however these states also urged the Supreme Court to grant the Bureau’s petition to address whether the 5th Circuit’s conclusion was correct.
As previously covered by a Buckley Special Alert, the 5th Circuit’s October 19 holding found that although the Bureau spends money pursuant to a validly enacted statute, the structure violates the Appropriations Clause because (i) the Bureau obtains its funds from the Federal Reserve (not the Treasury); (ii) the agency maintains funds in a separate account; (iii) the Appropriations Committees do not have authority to review the agency’s expenditures; and (iv) the Bureau exercises broad authority over the economy. The case involves a challenge to the Bureau’s Payday Lending Rule, which prohibits lenders from attempting to withdraw payments for covered loans from consumers’ accounts after two consecutive withdrawal attempts have failed due to insufficient funds. As a result of the 5th Circuit’s decision, lenders’ obligation to comply with the rule (originally set for August 19, 2019, but repeatedly delayed) will be further delayed while the constitutional issue winds its way through the courts. The Bureau’s petition also asked the court to consider the 5th Circuit’s decision to vacate the Payday Lending Rule on the premise that it was promulgated at a time when the Bureau was receiving unconstitutional funding. (Covered by InfoBytes here.)
- Amicus brief supporting CFPB’s position. The 22 states urged the Supreme Court to review the 5th Circuit’s decision, arguing that the Bureau’s funding is lawful and that even if the Supreme Court were to find a constitutional defect in the funding scheme, vacating otherwise lawfully-promulgated regulations is neither justified nor compelled by law. “Left undisturbed, the court of appeals’ reasoning could jeopardize many of the CFPB’s actions from across its decade-long existence, to the detriment of both consumers protected by those actions and financial-services providers that rely on them to guide their conduct,” the states said. In their brief, the states argued, among other things, that the Supreme Court should grant the petition “to review at least the question of whether the court of appeals erred in vacating a regulation promulgated during a time when the CFPB received allegedly unconstitutional funding.” The states asserted that the decision “threatens substantial harm” to the states because the states and their residents “could stand to lose the benefits of the CFPB’s critical enforcement, regulatory, and informational functions if the decision [] stands and is interpreted to impair the CFPB’s ongoing operations.” With respect to questions related to the Bureau’s funding structure, the states claimed that it is altogether speculative as to whether the Bureau would have behaved differently if its funding had come from the Treasury rather than the Federal Reserve. Former Director Kraninger’s ratification and reissuance of the Payday Lending Rule “is strong evidence that the CFPB would have issued the same regulation once again, after any constitutional defect was corrected,” the states said.
- Amicus brief opposing CFPB’s position. The 16 opposing states argued, however, that the Supreme Court should grant the Bureau’s petition to provide states with “certainty over their role” in regulating the financial system, and should affirm the 5th Circuit’s decision to “restore the CFPB’s accountability to the states.” In their brief, the states asked the Supreme Court “to resolve this issue quickly” and to “reinvigorate the protections of the Appropriations Clause, not weaken them.” The states maintained that if the Supreme Court does not quickly resolve the dispute, states “will have to litigate the same issue in other districts and circuits over and over,” and “[a]ny continuing confusion could seriously impede the growth of the consumer-financial services market at a time when the economy is already strained.” According to the brief, congressional oversight “ensures a level of state participation that ordinary administrative processes don’t allow.” In summary, the states’ position is that the 5th Circuit’s decision on the funding question is correct and that the court “was right to vacate a rule enacted without constitutional funding.”
District Court stays action against remittance provider while Supreme Court weighs CFPB’s funding structure
On December 9, the U.S. District Court for the Southern District of New York stayed an action brought by the CFPB and the New York attorney general against a defendant remittance provider until after the U.S. Supreme Court decides if it will review whether the U.S. Court of Appeals for the Fifth Circuit erred in holding that the Bureau’s funding structure violates the Appropriations Clause of the Constitution. Last month the DOJ, on behalf of the CFPB, submitted a petition for a writ of certiorari seeking Supreme Court review of the 5th Circuit’s decision during its current term. (Covered by InfoBytes here.) The New York AG and the Bureau sued the defendant in April for allegedly violating the EFTA and its implementing Regulation E, the Remittance Rule, and the Consumer Financial Protection Act (CFPA), among various consumer financial protection laws, in its handling of remittance transfers. (Covered by InfoBytes here.)
The defendant argued that the district court should hold off on deciding on its motion to dismiss per the aforementioned argument, but should nonetheless rule on its pending motion to transfer. The Bureau opposed the defendant’s request for a stay, countering “that a stay would not promote efficiency” since the issue of the Bureau’s standing would not affect the claims brought in the current action. The Bureau further asserted “that the public and the parties’ interest weighs against a stay, as it would hinder Plaintiffs’ enforcement of the consumer protection laws and make obtaining evidence down the line more difficult.”
The district court disagreed, stating that the Supreme Court may address the broader issue of the Bureau’s standing to bring enforcement actions in its decision, and that, regardless, the agency’s claims in the current action “are inextricably linked to CFPB rules and regulations, which themselves may be implicated by a Supreme Court decision should it grant the petition.” The district court stayed the case in its entirety and said that it will wait to decide on both motions until after the Supreme Court decides on the Bureau’s filed petition for a writ of certiorari.
District Court grants MSJ for plaintiff in FDCPA suit
On November 21, the U. S. District Court for the Northern District of Illinois denied a defendant debt collection company’s motion for summary judgment and granted plaintiff’s motion for summary judgment in an FDCPA suit. According to the opinion, the plaintiff sent a letter to the defendant disputing the accuracy of the information being reported to the credit reporting agency, saying the amount of the debt was incorrect. The defendant received the letter on February 1, 2021, and on February 3, the defendant reported the debt to the CRA, but failed to note that the debt was disputed. The CRA then communicated information about plaintiff’s debt to additional third parties. The next reporting cycle for the plaintiff’s account closed on March 3, 2021. At that time, the defendant correctly reported that plaintiff’s debt was disputed. The defendant explained that although the servicer received the plaintiff’s dispute letter on February 1, 2021, “no one was able to analyze, process, and review” it until February 4, 2021, by which time it had already reported the debt to the CRA.
The defendant argued that it can take up to seven business days for its credit review team to review a dispute letter that it receives, and information about a disputed debt may be communicated to third parties in the interim. The defendant also argued that the plaintiff lacked standing to sue because there was no negative impact on her credit score as a result of the dispute not being transmitted.
According to the court, the defendant’s “system tolerates the communication of false information in cases where disputes arrive at its doorstep at the close of its monthly reporting periods, and it lacks procedures for promptly correcting information it later discovers was false at the time it was communicated to a third party.” The court also found that the plaintiff’s constitutional standing does not depend on proof of damage to her credit score.
States say student loan trusts are subject to the CFPA’s prohibition on unfair debt collection practices
On November 15, a bipartisan coalition of 23 state attorneys general led by the Illinois AG announced the filing of an amicus brief supporting the CFPB’s efforts to combat allegedly illegal debt collection practices in the student loan industry. As previously covered by InfoBytes, in February, the U.S. District Court for the District of Delaware stayed the Bureau’s 2017 enforcement action against a collection of Delaware statutory trusts and their debt collector after determining there may be room for reasonable disagreement related to questions of “covered persons” and “timeliness.” The district court certified two questions for appeal to the U.S. Court of Appeals for the Third Circuit related to (i) whether the defendants qualify as “covered persons” subject to the Bureau’s enforcement authority; and (ii) whether the case can be continued after the Supreme Court’s 2020 decision in Seila Law v. CFPB (which determined that the director’s for-cause removal provision was unconstitutional but was severable from the statute establishing the Bureau—covered by a Buckley Special Alert). Previously, the district court concluded that the suit was still valid and did not need ratification because—pointing to the majority opinion in the Supreme Court’s decision in Collins v. Yellen (covered by InfoBytes here)—“‘an unconstitutional removal restriction does not invalidate agency action so long as the agency head was properly appointed[,]’” and therefore the Bureau’s actions are not void and do not need to be ratified, unless a plaintiff can show that “the agency action would not have been taken but for the President’s inability to remove the agency head.” The district court later acknowledged, however, that Collins “is a very recent Supreme Court decision” whose scope is still being “hashed out” in lower courts, which therefore “suggests that there is room for reasonable disagreement and thus supports an interlocutory appeal here.”
The states argued that they have a “substantial interest” in protecting state residents from unlawful debt collection practices, and that this interest is implicated by this action, which addresses whether the defendant student loan trusts are “covered persons” subject to the prohibition on unfair debt collection practices under the CFPA. Urging the 3rd Circuit to affirm the district court’s decision to deny the trusts’ motion to dismiss, the states contended among other things, that hiring third-party agencies to collect on purchased debts poses a large risk to consumers. These types of trusts, the states said, “profit only when the third parties that they have hired are able to collect on the flawed debt portfolios that they have purchased.” Moreover, “[d]ebt purchasing entities, including entities like the [t]rusts, are thus often even more likely than the original creditors to resort to unlawful tactics in undertaking collection activities,” the states stressed, explaining that in order to combat this growing problem, many states apply their prohibitions on unlawful debt collection practices “to all debt purchasers that seek to reap profits from these illegal activities, including those purchasers that outsource collection to third parties.” The Bureau’s decision to do the same is therefore appropriate under the CFPA, the states wrote, adding that “as a practical matter, these debt purchasers are as problematic as debt purchasers that collect on their own debt. The [t]rusts’ request to be treated differently because of their decision to hire third party agents to collect on the debts that they have purchased (and reap the profits on) should be rejected.”
District Court issues judgment against company bilking 9/11 first responders
On November 23, the U.S. District Court for the Southern District of New York entered a stipulated final judgment and order against a finance company, two related entities, and the companies’ founder and owner (collectively, “defendants”) for engaging in deceptive and abusive acts or practices under the Consumer Financial Protection Act (CFPA) related to the offering of cash advances to people on their settlement payouts from victim-compensation funds established for certain first responders to the World Trade Center attack on September 11, 2001.
As previously covered by InfoBytes, in 2017, the CFPB and the New York attorney general filed a complaint alleging that the defendants engaged in deceptive and abusive acts by misleading consumers into selling expensive advances on benefits to which they were entitled by mischaracterizing extensions of credit as assignments of future payment rights, thereby causing the consumers to repay far more than they received. In March 2022, the district court ruled that the CFPB could proceed with its 2017 enforcement action against the defendants (covered by InfoBytes here) two years after the U.S. Court of Appeals for the Second Circuit vacated a 2018 district court order dismissing the case on the grounds that the Bureau’s single-director structure was unconstitutional, and that, as such, the agency lacked authority to bring claims alleging deceptive and abusive conduct by the company (covered by InfoBytes here).
The 2nd Circuit remanded the case to the district court, determining that the U.S. Supreme Court’s ruling in Seila Law LLC v. CPFB (holding that the director’s for-cause removal provision was unconstitutional but severable from the statute establishing the Bureau, as covered by a Buckley Special Alert) superseded the 2018 ruling. The appellate court further noted that following Seila, former Director Kathy Kraninger ratified several prior regulatory actions (covered by InfoBytes here), including the enforcement action brought against the defendants, and as such, remanded the case to the district court to consider the validity of the ratification of the enforcement action. The defendants later filed a petition for writ of certiorari, arguing that the Bureau could not use ratification to avoid dismissal of the lawsuit, but the Supreme Court declined the petition. (Covered by InfoBytes here). In 2021, the defendants filed a motion to dismiss the Bureau’s enforcement action on the grounds that “it was brought by an unconstitutionally constituted agency” and that the Bureau’s “untimely attempt to subsequently ratify this action cannot cure the agency’s constitutional infirmity.” (Covered by InfoBytes here). The district court turned to the Supreme Court’s June 2021 majority decision in Collins v. Yellen, which held that “‘an unconstitutional removal restriction does not invalidate agency action so long as the agency head was properly appointed[.]’” Accordingly, the agency’s actions are not void and do not need to be ratified, unless a plaintiff can show that “the agency action would not have been taken but for the President’s inability to remove the agency head.” (Covered by InfoBytes here).
In the amended complaint, filed in July 2022, the Bureau and the New York AG alleged that, among other things, the defendants engaged in deceptive acts by misrepresenting to consumers that the company’s contracts created valid and enforceable assignments of their payment proceeds when, in fact, the assignments were not valid and enforceable. The amended complaint also alleged that the company misrepresented to consumers when they would receive funds from the company, often promising consumers an earlier date of disbursement than the actual disbursement. Additionally, the joint complaint alleged that the defendants violated state law by collecting on purported assignments that are void, unenforceable, and uncollectable, or alternatively, by collecting on contracts that functioned as loans with interest rates that exceed usury limits under state law, which are also void and on which no payment is due.
Under the terms of the final judgment, defendants must pay a $1 civil money penalty to the Bureau and must not take any action to collect any unpaid or future amounts owed by the harmed responders, which totals at least $600,000. Under the order, defendants must also refrain from participating in offering, brokering, or providing credit or advances of funds to individuals entitled to payments from governmentally created funds established to compensate victims of 9/11.