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CFPB Publishes Notices and Requests for Comment Concerning Collection of Consumer Complaints
On November 28, the CFPB published two notices of its intention to obtain OMB approval to continue its existing consumer complaint collection activities using its “Consumer Response Intake Form” and “Generic Information Collection Plan for Consumer Complaint and Information Collection System (Testing and Feedback).” According to the CFPB, use of the forms allows for electronic complaint submission on the Bureau’s website and streamlines the complaint process for consumers. Comments on the agency’s notices (CFPB-2017-0035 and CFPB-2017-0036) must be received by December 28, 2017.
Court Denies Restraining Order Preventing Mulvaney’s Appointment
On November 28, Judge Timothy Kelly denied a request by Leandra English, who was appointed Deputy Director of the CFPB by Richard Cordray on the same day as his resignation, for a temporary restraining order preventing the President from appointing anyone other than English as Acting Director and preventing Mick Mulvaney from serving as the Acting Director (see previous InfoBytes coverage for details).
English’s counsel, in remarks to reporters outside the courtroom, stated they may seek an appeal, may move for a preliminary injunction, or may move for an expedited final decision on the merits.
Federal Reserve Governor Calls for Collaboration Between Regulators, Banks, Data Aggregators, and Fintech Firms for Financial Data Sharing Standards
On November 16, Federal Reserve Governor Lael Brainard spoke at a fintech conference sponsored by the University of Michigan regarding consumers’ right to understand and control how their financial data is used by third-party aggregators, and in developing fintech technology. “There's an increasing recognition that consumers need better information about the terms of their relationships with aggregators, more control over what is shared, and the ability to terminate the relationship,” Brainard noted. “Consumers should have relatively simple means of being able to consent to what data are being shared and at what frequency. And consumers should be able to stop data sharing and request the deletion of data that have been stored.”
Brainard emphasized that regulators, data aggregators, bank partners, and fintech developers should jointly develop a common, consistent message for how customer data is shared and protected within the fintech space and “other areas experiencing significant technological change.” As previously reported in InfoBytes, on October 18, the CFPB issued principles concerning the security and transparency of financial data sharing when companies—including fintech firms—get authorization from consumers to access their account data that reside in separate organizations to provide products and services.
Legal Battle Begins Over Mulvaney Appointment as Acting Director of CFPB
On November 26, the newly appointed Deputy Director of the CFPB, Leandra English, filed a lawsuit in U.S. District Court for the District of Columbia against President Trump and Mick Mulvaney, the Director of the Office of Management and Budget (OMB), seeking declaratory judgments that English is the Acting Director of the CFPB – and Mulvaney is not – as well as emergency temporary restraining orders preventing the President from appointing anyone other than English as Acting Director and preventing Mulvaney from acting as the Acting Director.
The legal action results from the November 24 resignation of Richard Cordray as the Director of the CFPB and his naming of English as the Bureau’s Deputy Director (previously covered by a Buckley Sandler Special Alert) citing to section 1011(b)(5) of the Dodd-Frank Act (DFA), which provides that the CFPB’s Director may appoint the Deputy Director who “shall…serve as acting Director in the absence or unavailability of the Director.” Following Cordray’s official resignation, the White House issued an announcement appointing Mulvaney as Acting Director under the Federal Vacancies Reform Act of 1998 (FVRA).
On November 25, the Department of Justice (DOJ) Office of Legal Counsel released a memorandum in support of the President’s authority to designate Mulvaney as the Acting Director of the Bureau under the FVRA. According to the DOJ, while Congress recognized there would be cases in which FVRA was not the “exclusive means” for succession, Congress did not intend for the FVRA to be “unavailable” when another statute provides an alternative for succession. Accordingly, the DOJ asserts that, notwithstanding the succession provision in the DFA, FVRA gives the President the authority to, “rely upon it in designating an acting official in a manner that differs from the order of succession otherwise provided by an office-specific statute.” In her complaint, English argues that the succession provision in the DFA controls over the FVRA and that the appointment of a White House official is inconsistent with the CFPB’s independent structure.
Similarly, on November 25, the General Counsel for the CFPB, Mary Mcleod, issued a statement to the senior leaders of the Bureau concurring with the DOJ’s conclusion that “the President may use the [FVRA] to designate an acting official, even when there is a succession statute under which another official may serve as acting.” Mcleod concluded that Mulvaney is the Acting Director of the CFPB and encouraged all Bureau staff to act consistently with that conclusion.
Oral arguments on English’s emergency motion were held on November 27 by Judge Timothy Kelly, a Trump appointee. Judge Kelly did not rule on the motion and granted the government’s request to file papers responding to English’s arguments.
CFPB Fines Loan-Servicing Software Company $1.1 Million for Flaws Leading to the Reporting of Inaccurate Consumer Information
On November 17, the CFPB ordered a loan-servicing software company to pay a $1.1 million penalty for errors that resulted in the company furnishing incorrect consumer information related to over one million borrowers to the credit reporting agencies. The consent order alleges that the company violated the Consumer Financial Protection Act when its third-party software application generated and furnished inaccurate and incomplete information to consumer reporting agencies because of known software defects. The company allegedly did not share the existence of the defects with its auto-lender clients. In addition to the civil money penalty, the company was ordered to: (i) explain its errors to its clients; (ii) fix the faulty software; and (iii) provide the Bureau with a compliance plan outlining how it plans to identify and fix the defects, as well as ensure that the software is capable of reporting accurate information.
Buckley Special Alert: CFPB director Cordray resigns, attempts to name successor
Today, CFPB Director Richard Cordray named the agency’s chief of staff, Leandra English, as the bureau’s deputy director, and submitted his resignation to President Trump. The moves follow media reports that President Trump planned to appoint OMB Director Mick Mulvaney as the acting director of the CFPB under the Federal Vacancies Reform Act and may signal a confrontation between current bureau leadership and the White House over succession at the agency.
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Click here to read full special alert.If you have questions about the announcement or other related issues, please visit our Consumer Financial Protection Bureau practice page, or contact a Buckley attorney with whom you have worked in the past.
Trump to Select Mulvaney as Interim CFPB Director
According to media sources, President Trump is expected to select Mick Mulvaney, the current Director of the White House Office of Management and Budget (OMB), to serve as the interim Director of the CFPB upon Richard Cordray’s resignation at the end of this month. Mulvaney would keep his current position and serve as both the Director of OMB and Acting Director of the CFPB throughout the interim term.
CFPB Initiates Complaint Against Company for Deceptive, Unfair, and Abusive Loan Collection Practices
On November 15, the CFPB announced it had filed a complaint against a Texas-based service provider, alleging that it had assisted in the collection of loans that were, in whole or in part, void under state law. The complaint filed in the U.S. District Court for the District of Montana alleges that the service provider, which provided services to three tribal lending entities engaged in the business of extending online installment loans and lines of credit, along with two companies responsible for the collection process (collectively defendants), assisted in the collection of loans that consumers were not legally obligated to pay based on identified states’ usury laws or licensing requirements. Although the specific claims vary by defendant, the complaint alleges that the defendants engaged in deceptive, unfair, and abusive acts and practices in violation of the Consumer Financial Protection Act (CFPA) by:
- misrepresenting that consumers were responsible for money owed on loans that were void in whole or in part, or did not exist, because the loans were void under state licensing or usury laws (voided loans);
- demanding repayment from consumers on voided loans by issuing “demand letters,” electronically debiting funds from consumer bank accounts, and placing phone calls to consumers;
- failing to disclose to consumers that defendants had no legal right to collect on certain voided loans and that consumers were not legally obligated to repay the loans;
- causing injury to consumers by servicing and collecting on the voided loans;
- taking advantage of consumers’ “lack of understanding” regarding the voided loans; and
- providing assistance in, or administering, the origination and collection of the voided loans.
The CFPB is seeking monetary relief, civil money penalties, injunctive relief, and a prohibition of the service provider’s ability to commit future violations of the CFPA.
CFPB Requests Comments on Overdraft Disclosures; CFPB Announces Final Language Access Plan; Holds Ceiling at $12.00 for Allowable FCRA Charges
On November 15, the CFPB published a request for comment on a proposal to the Office of Management and Budget (OMB) to conduct online testing of point of sale/ATM (POS/ATM) overdraft disclosure forms. In the request, the Bureau invited comments on, (i) “[w]hether the collection of information is necessary for the proper performance of the functions of the Bureau, including whether the information will have practical utility”; (ii) “[t]he accuracy of the Bureau’s estimate of the burden of the collection of information, including the validity of the methods and the assumptions used”; (iii) “[w]ays to enhance the quality, utility, and clarity of the information to be collected”; and (iv) “[w]ays to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.” Comments must be received by January 16, 2018.
On November 16, the CFPB released the final version of its Language Access Plan (Plan) to provide non-English speaking persons access to its programs and services. The Plan highlights two key language access functions of the Bureau: offering translated consumer-facing brochures and handling complaints from consumers in multiple languages. The Bureau originally proposed the Plan in 2014 (covered previously by InfoBytes). The final Plan is current as of November 13, 2017.
CFPB also announced on November 16 that the maximum allowable charges for certain disclosures under the Fair Credit Reporting Act (FCRA) will remain at the current level. Each year the original amount referenced in the FCRA must be readjusted (and rounded to the nearest fifty cents) based on the annual percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U). The amount for 2018, based on the annual percentage increase in the CPI-U, remains unchanged at $12.00.
Buckley Sandler Special Alert: Cordray to resign as director of CFPB
Richard Cordray said today in an email to the staff of the Consumer Financial Protection Bureau that he will resign as director before the end of November. While it has long been expected that he would seek the Democratic nomination for the governorship of Ohio, he did not specify his plans in the email.
Richard Cordray is the first confirmed Director of the CFPB, which was created by the Dodd-Frank Act in the wake of the financial crisis. Following his recess appointment by President Obama in January 2012, Cordray oversaw an aggressive rulemaking and enforcement agenda, which accelerated following the election of President Trump in November 2016.***
Click here to read full special alert.If you have questions about the announcement or other related issues, please visit our Consumer Financial Protection Bureau practice page, or contact a Buckley Sandler attorney with whom you have worked in the past.