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Recently, CFPB Director Richard Cordray delivered prepared remarks at the Financial Literacy and Education Commission Meeting in Washington, DC on May 24 and at the People and Places Conference in Arlington, VA on May 31.
Financial Literacy and Education Commission (Commission). Coordinated by the Treasury Department’s Office of Financial Security, the Commission presented results from the 2015 Programme for International Student Assessment study on financial education in the U.S. and how it compares to other countries. Cordray’s opening remarks stressed the-importance of providing financial resources and educational tools empowering young people and outlined efforts the CFPB has underway, such as the Youth Financial Education resource page, the online Money as You Grow tool, and other community outreach education programs.
People and Places Conference. A keynote speaker at the conference, Cordray outlined the three main components of the CFPB’s work: (i) supervision and enforcement; (ii) implementing common-sense rules; and (iii) hearing and addressing consumer complaints to help keep companies accountable. Regarding supervisory and enforcement actions, Cordray stated that the Bureau’s activities serve to help change institutions’ practices for the better by (i) providing consistent supervision; (ii) initiating public enforcement actions to serve as a deterrent to “bad behavior”; and (iii) upholding “laws that ban unfair, deceptive, or abusive acts or practices.” Cordray asserted that by setting expectations financial institutions must meet in their own compliance work, similar violations can be avoided. Cordray spoke next about the need to establish “common-sense rules of the road” in order to protect consumers. He used the mortgage industry as an example of how the Bureau responded to Congress’s directive for developing “much-needed reforms” by “implementing rules to govern underwriting, servicing, and loan originator compensation” and “temper[ed] these regulations for small creditors so as to ease regulatory burdens on community banks and credit unions.” Furthermore, Cordray stated the Bureau’s ability to receive and process consumer complaints is crucial to identifying, understanding, and prioritizing problems.
Florida Attorney General Rolls Out Military Consumer Protection Program; CFPB Publishes Annual Servicemember Report
On May 17, Attorney General Pam Bondi announced a new consumer protection program designed to spread awareness and help prevent deceptive business practices affecting military and veteran communities. The Military and Veterans Assistance Program (MVAP) will provide resources and information to consumers on emerging scams and other consumer protection related issues, as well as encourage open communication among local, state, and federal partners to help ensure complaints are handled appropriately.
On May 16, the CFPB’s Office of Servicemember Affairs (OSA) published its fifth annual servicemember report, The Office of Servicemember Affairs: Charting our course through the military lifecycle, and a follow-up blog post outlining the work the office has conducted over the past five years and the work it intends to do in the future. The structure of the report—designed to be presented within the construct of the “military lifecycle”—presents the ways that “many common and some uniquely-military consumer issues . . . fit within that continuum.” Under the Dodd-Frank Act, OSA monitors servicemember complaints about consumer financial products or services and coordinates with the efforts of federal and state agencies to improve measures and provide assistance. As of April 1, 2017, the OSA reports that it has handled approximately 74,800 complaints submitted by servicemembers, veterans, and their families since July 2011, of which 42 percent related to debt collection, 18 percent to mortgages, and 11 percent to credit reporting. In total, the OSA claims it has provided approximately $3.3 million in monetary relief to military consumers who submitted complaints to the CFPB.
On May 9, the FTC announced the launch of its new website—ftc.gov/SmallBusiness—designed to provide useful information so small businesses can protect their networks and customer data from scams and cyberattacks. The website offers specific guidance such as the Small Business Computer Security Basics guide, which shares computer security basics to help companies: (i) protect their files and devices; (ii) train employees to think twice before sharing the business’s account information; (iii) keep their wireless networks protected; and (iv) respond to data breaches. Information on other cyber threats such as ransomware and phishing schemes that target small businesses is also provided. According to the FTC, the U.S. Small Business Administration reports that “there are more than 28 million small businesses nationwide” that are at risk, many of which lack the resources larger companies have to spend on cybersecurity. Further, the FTC noted that Symantec Corp. found that “the percentage of spear-phishing attacks targeting small business rose dramatically from 18 percent to 43 percent between 2011 and 2015.”
On April 27, the CFPB announced in a blog post its release of a core set of financial outcomes designed to help human services organizations integrate financial empowerment and capability initiatives into their programs. Strategies include implementing financial education tools and financial counseling or coaching. In its April report, Tracking Success in Financial Capability and Empowerment Programs, the Bureau identified the following five core outcomes to help consumers improve their financial capabilities: (i) planning and goals; (ii) savings; (iii) bill payment; (iv) credit profile; and (v) financial well-being. According to the report, which assists the financial empowerment field in encouraging commonality in outcomes, core outcomes are designed to:
- “help inform and guide service delivery organizations and those who design, fund, or evaluate service programs as they assess or document the value of integrating financial capability and empowerment strategies into the delivery of human services programs”;
- “provide a suggested core set of common outcomes to measure for the financial empowerment field”;
- “augment, not displace, current programmatic outcomes and accommodate a broad range of different program types”; and
- “help provide consistency across programs by creating a common framework and language for demonstrating success for the provision of financial empowerment services as an element of other human services programs.”
According to the Bureau’s Office of Financial Empowerment, it began identifying common core outcomes with input from multiple financial empowerment practitioners and researchers to “improve the financial well-being of “lower-income and economically vulnerable consumers.”
On April 22, the CFPB highlighted a series of consumer education resources as part of its participation in Money Smart Week—(April 22-29)—and Financial Literacy Month. The CFPB blog post is here. Among the financial decision-making resources are: (i) Ask CFPB—an online tool that the Bureau states will provide “clear, unbiased” answers to common financial questions; (ii) Owning a Home—a tool that provides resources for homebuyers; and (iii) Money as You Grow—a resource center where parents can find activities and conversation starters to help children build money skills. In addition, the Bureau also advised consumers that there are numerous free financial education classes and seminars conducted by local and regional organizations covering a variety of money-management topics such as buying a house, credit management, saving for college, and financing retirement. Consumers should visit Money Smart Week to find events and online resources.
On April 3, the FDIC released a list of its free financial education tools in recognition of National Financial Capability Month. The tools were developed to help educate people of all ages and expand their financial knowledge and skills. A few of the offered tools include: (i) Money Smart age-appropriate, multi-lingual financial education materials; (ii) Money Smart for Small Businesses for new entrepreneurs; (iii) Money Smart News featuring resources for financial educators; and (iv) FDIC Consumer News, which offers practical guidance on ways to use financial services.
On March 29, the U.S. Supreme Court vacated and remanded a lawsuit challenging a New York law—N.Y. Gen. Bus. Law § 518—which provides that no seller “may impose a surcharge on a holder who elects to use a credit card” instead of a cash payments. (See Expressions Hair Design, et al. v Schneiderman.) Plaintiffs, a group of New York merchants, argued that the law violates the First Amendment by regulating how they communicate their prices. Plaintiffs further alleged that the law is unconstitutionally vague. In its defense, the State of New York asserted that the law merely prevents unfair profiteering, consumer anger, and deceptive sales tactics. After the district court ruled in favor of the Plaintiffs, the Court of Appeals for the Second Circuit vacated the judgment with instructions to dismiss. The Second Circuit appellate panel reasoned that the law is a “price regulation” that regulates conduct rather than speech and, as such, is immune from scrutiny under the First Amendment.
Writing for the Supreme Court—which was unanimous in the judgment—Chief Justice John G. Roberts disagreed with the Second Circuit panel’s conclusion that the law regulates conduct alone. Specifically, Justice Roberts notes in his opinion that Section 518 “is not like a typical price regulation,” which regulates a seller’s conduct by dictating how much to charge for an item. Rather, the Chief Justice explained, the law regulates “how sellers may communicate their prices.” Notably, the majority opinion declined to delve into the First Amendment issues raised by the parties, including whether the law is a valid commercial speech regulation, citing its status as “a court of review, not of first view.”
Justice Stephen G. Breyer filed a concurring opinion in which he noted that because the law’s interpretation is unclear, on remand, the Second Circuit should ask New York's highest court to clarify it, as this “is a matter of state law.” Justice Sonia M. Sotomayor, joined by Justice Samuel A. Alito, Jr., also filed a concurring opinion in which she called the majority's ruling a “quarter-loaf outcome,” because the holding failed to address whether the law unconstitutionally restricts speech. The Second Circuit erred by not certifying the question of the statute's interpretation to the N.Y. Court of Appeals “and this Court errs by not correcting it,” Sotomayor reasoned. The Justice indicated that she would have “vacate[d] the judgment below and remand with instructions to” certify the question for a definitive interpretation.
CFPB Issues Companion Guide to Your Money, Your Goals Toolkit, Targets “Justice-Involved” Individuals
Earlier this month the CFPB published its Focus on Reentry companion guide to the Your Money, Your Goals toolkit introduced in 2014. The companion guide, intended to assist organizations and their staff on how to address the unique financial challenges facing individuals pre- and post-release from incarceration as well as encourage financial empowerment and consumer financial protection education, also contains tools designed to aid “justice-involved” individuals. In particular, Focus on Reentry helps frontline staff teach these individuals to:
- Assess financial goals and understand their current financial situation to identify financial challenges to successful transition;
- Set “SMART” goals (Specific, Measurable, Able to be reached, Relevant, and Time bound) and identify steps to achieve them;
- Understand potential issues they may face when trying to secure documents related to identification to help ease the transition process;
- Identify and prioritize debt—both debt arising from the individual’s involvement in the criminal justice system (criminal justice debt) as well as consumer debt—in order to set debt management goals;
- Understand the process for accessing and reviewing credit reports and how to dispute errors to credit reporting agencies; and
- Understand individual rights to obtain and review criminal background screening reports and how to dispute and correct errors in criminal background checks.
In addition, Focus on Reentry provides information and resources on the impact of incarceration on student loans, access to financial aid, tax obligations, as well as many other categories.
On March 10, the CFPB announced the 30 organizations selected to join the Your Money, Your Goals Cohort. These organizations, selected from a pool of respondents to the Bureau’s October invitation to submit letters of interest, will receive training and technical assistance on how to use the program’s “financial empowerment materials” to better serve low-income and economically vulnerable populations.
On March 13, the FDIC announced enhancements to Money Smart for Older Adults, its financial education program geared toward preventing elder financial exploitation. The program, which the FDIC developed in partnership with the CFPB, was designed as a response to the growing concerns about financial abuse of senior citizens, which often goes unreported. Statistics provided by the National Adult Protective Services Association show that “only one in 44 cases of financial abuse comes to the attention of authorities, and 90 percent of victims are exploited by a relative, friend, or trusted acquaintance.” The program, which covers topics such as identity theft and scams that target homeowners, also provides tools to help better educate seniors on money management and financial awareness. The recently-announced enhancements include new information and resources aimed at preventing elder financial exploitation.
- Sherry-Maria Safchuk to discuss UDAAP at an American Bar Association webinar
- Jeffrey P. Naimon to discuss "What to expect: The new administration and regulatory changes" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Jonice Gray Tucker to discuss “The future of fair lending” at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Steven R. vonBerg to discuss "LO comp challenges" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Michelle L. Rogers to discuss "Major litigation" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Michelle L. Rogers to discuss “The False Claims Act today” at the Federal Bar Association Qui Tam Section Roundtable