Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
On March 28, the U.S. District Court for the Central District of California entered a stipulated final judgment and order resolving the CFPB’s allegations against a California-based company for allegedly buying and selling personal information from payday and installment loan applications without properly vetting buyers and sellers. As previously covered by InfoBytes, the CFPB’s December 2015 complaint alleged that, among other things, the company (i) knew or should have known that the lead generators in its network used false or misleading statements to obtain consumer information; and (ii) connected consumers with lenders that offered less favorable loan terms than were otherwise available, did not comply with state usury limits, or claimed they were exempt from state regulation and jurisdiction. The stipulated order requires the company to pay $1 million for consumer redress and $3 million in civil money penalties. Additionally, the company is banned from acting as a lead generator, lead aggregator, or data broker in connection with the offering of certain loans. The company neither admitted nor denied the allegations.
On March 29, the CFPB announced that the HMDA Modified Loan Application Registers (LARs) data is available for 2018. Specifically, the Modified LARs contain loan level information for 2018 on HMDA filers, covering approximately 5,400 financial institutions. This is the first release in which the additional data required by the 2015 HMDA rule is available. Later this year, additional information will be published, including a complete loan level dataset.
On March 27, the U.S. District Court for the Central District of California entered a consent judgment ending a CFPB lawsuit against a group of affiliated law firms and their managing attorneys. As previously covered by InfoBytes in 2017, the Bureau’s enforcement action alleged that the defendants violated the Telemarketing Sales Rule by, among other things, (i) collecting improper fees in advance of providing debt relief services; (ii) misrepresenting that advance fees would not be charged; and (iii) providing substantial assistance to another company it knew or should have known was engaged in acts or practices that violated the rule. Under the terms of the consent judgment, the defendants—who have neither admitted nor denied the Bureau’s allegations or the factual findings outlined in the judgment—agreed to pay approximately $35.3 million in redress to affected consumers and a $40 million civil money penalty. However, based on the defendants’ inability to pay this amount, full payment is suspended subject to the defendants’ paying $50,000 to affected consumers and $1.00 toward the CMP.
On March 26, the OCC released Bulletin 2019-16, which announces that the FFIEC Task Force on Consumer Compliance developed new interagency examination procedures to reflect the amendments to Regulations Z and E under the CFPB’s Prepaid Accounts Rule (covered by InfoBytes here), which go into effect on April 1. Specifically, the examination procedures reflect (i) Regulation E requirements covering disclosures, limited liability and error resolution, periodic statement, and posting of account agreements; and (ii) Regulation Z requirements covering overdraft credit features with prepaid accounts.
On March 21, the U.S. District Court for the Northern District of Georgia partially granted the CFPB’s motion for summary judgment against a New York-based company and three individuals for allegedly violating the CFPA and the FDCPA in a debt collection operation, but denied the motion for the remaining defendants—a Georgia-based company and one individual—determining there was a genuine issue of material fact. As previously covered by InfoBytes, in March 2015, the CFPB filed a lawsuit against participants in the debt collection operation, alleging that the participants attempted to collect debt that consumers did not owe or that they were not authorized to collect. Further, the CFPB alleged that the participants used harassing and deceptive techniques, including placing robocalls through a telephone broadcast service provider to millions of consumers, stating that the consumers had engaged in check fraud and threatening them with legal action if they did not provide payment information. As a result, according to the CFPB’s allegations, the participants received millions of dollars in profits from the targeted consumers. The CFPB moved for summary judgment on all claims.
The court granted the motion on all claims against the New York-based company and three individuals, concluding that they committed multiple violations of the CFPA and the FDCPA through, among other things, the robocalls, false legal threats, and the processing of consumer payments. With respect to the CFPA claims against certain individuals, the court found that they provided “substantial assistance” to the other participants in the operation as they committed actions in violation of the CFPA, and therefore were liable themselves. With respect to the Georgia-based company and one individual, the court concluded that there was a genuine issue of material fact as to whether either qualified as a “debt collector” under the FDCPA and, therefore denied the CFPB’s motion as to those claims. Because there are remaining issues as to some of the participants’ liability, the court concluded that a ruling on damages would be premature.
On March 19, the CFPB released the “Complaint Snapshot: Servicemembers, Veterans, and Military Families 50 State Report,” which provides state-specific data on the nearly 34,000 complaints received from servicemembers, veterans, and their families in 2018 (which the CFPB collectively defines as, “servicemember”). Specifically, for each state, the snapshot provides (i) the total number of servicemember complaints handled in 2018 and the percentage change since 2017; (ii) distribution of complaints by product for both servicemembers and non-servicemembers; (iii) distribution of complaints by branch of service; and (iv) a visual representation of complaints by zip code. Notably, servicemember complaints increased by 12 percent from 2017 to 2018. The states with the highest number of servicemember complaints include Texas, California, Florida, and Georgia. The Bureau has received over 133,000 complaints from servicemembers since 2011.
See recent article by Buckley attorneys, "Takeaways from military complaints at the CFPB."
On March 25, the CFPB announced that the Federal Financial Institutions Examinations Council (FFIEC) issued the 2019 edition of the “Guide to HMDA Reporting: Getting It Right!,” which reflects the amendments made to HMDA by the May 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act and the August 2018 interpretive and procedural rule issued by the CFPB. (Covered by InfoBytes here.) The guide includes (i) a summary of responsibilities and requirements; (ii) directions for assembling the necessary tools; and (iii) instructions for reporting HMDA data.
In March, the CFPB updated its examination procedures for short-term, small-dollar lending (payday lending) in its Supervision and Examinations Manual. The procedures are comprised of modules and each examination will cover one more module. Prior to using the procedures, examiners will complete a risk assessment and examination scope memorandum, which will assist in determining which of the five modules the exam will cover: (i) marketing; (ii) application and origination; (iii) payment processing and sustained use; (iv) collections, accounts in default, and consumer reporting; and (v) service provider relationships. The examinations will review for potential violations of TILA, EFTA, FDCPA, FCRA, ECOA, UDAAP, and Gramm-Leach-Bliley Act (GLBA), all of which apply to payday lending.
On March 20, the CFPB published in the Federal Register two requests to renew information collections, one on the “Report of Terms of Credit Card Plan,” which collects data from at least 150 financial institutions on credit card pricing and availability, and the other on ECOA and Regulation B. For both information collections, the Bureau is seeking comments on (i) whether the information collections are necessary for the proper function of the Bureau; (ii) if the Bureau accurately estimates the burden of the collection and how to minimize that burden; and (iii) how the Bureau can “enhance the quality, utility, and, clarity of the information” collected. Comments on both requests must be received by May 20.
On March 21, the CFPB announced the Bureau’s advisory committee programs will be enhanced as a result of Director Kraninger’s engagement with current and former committee members during her three-month listening tour. Effective 2020, the committees—Consumer Advisory Board (CAB), Community Bank Advisory Council (CBAC), and Credit Union Advisory Council (CUAC)—will expand their focus to “broad policy matters” and will meet in-person three times a year, instead of two. Additionally, the Academic Research Council (ARC) will be a “Director-level” advisory committee and will meet separately, in-person and twice a year. Memberships to all committees will now be two-year terms, and the terms will be staggered. The Bureau is now accepting applications for 2020 committee membership. Applications must be submitted within 45 days of the notice being published in the Federal Register.
- Buckley Webcast: The next consumer litigation frontier? Assessing the consumer privacy litigation and enforcement landscape in 2019 and beyond
- Buckley Webcast: The CFPB’s proposed debt collection rule
- Buckley Webcast: Trends in e-discovery technology and case law
- Brandy A. Hood to discuss "What the flood? Don’t get washed away by a flood of changes" at the American Bankers Association Regulatory Compliance Conference
- Daniel P. Stipano to discuss "Mitigating the risks of banking high risk customers" at the American Bankers Association Regulatory Compliance Conference
- Daniel P. Stipano, Kari K. Hall, Brandy A. Hood, and H Joshua Kotin to discuss "Regulations that matter in a deregulatory environment" at the American Bankers Association Regulatory Compliance Conference Power Hour
- Buckley Webcast: Data breach litigation and biometric legislation
- Hank Asbill to discuss "Pay no attention to the man behind the curtain: Addressing prosecutions driven by hidden actors" at the National Association of Criminal Defense Lawyers West Coast White Collar Conference
- Daniel P. Stipano to discuss "Keep off the grass: Mitigating the risks of banking marijuana-related businesses" at the ACAMS AML Risk Management Conference
- Daniel P. Stipano to discuss "Mid-year policy update" at the ACAMS AML Risk Management Conference
- Amanda R. Lawrence to discuss "Navigating the challenges of the latest data protection regulations and proven protocols for breach prevention and response" at the ACI National Forum on Consumer Finance Class Actions and Government Enforcement
- Benjamin W. Hutten to discuss "Requirements for banking inherently high-risk relationships" at the Georgia Bankers Association BSA Experience Program
- Brandy A. Hood to discuss "RESPA Section 8/referrals: How do you stay compliant?" at the New England Mortgage Bankers Conference
- Daniel P. Stipano to discuss "Lessons learned from recent enforcement actions and CMPs" at the ACAMS AML & Financial Crime Conference
- Daniel P. Stipano to discuss "Assessing the CDD final rule: A year of transitions" at the ACAMS AML & Financial Crime Conference
- Douglas F. Gansler to discuss "Role of state AGs in consumer protection" at a George Mason University Law & Economics Center symposium