All Things FinReg

Editor

Charles M. Horn

State Attorneys General: Status Quo on the Surface, but Change in Washington Means Increased Enforcement Risk From the States

By Nicholas M. Gess , Michelle Park Chiu , Michael S. Kraut , David I. Monteiro , and Robin Nunn

// November 10, 2020

Last week’s state attorney general races brought little change on the surface, but change in Washington significantly increases the risk of enforcement and litigation by the states. If it seems counterintuitive, it is. But this Washington changeover heightens the complexity of the relationship between Washington and state capitols.

State attorneys general wear two hats. On the one hand they are typically their state’s chief law enforcement and legal officer. On the other hand, they are a statewide elected official. Thus, a pairing of legal and political. They also may well be the most powerful officials in our government because there are few checks on their authority to investigate and litigate. A governor may sign laws only after legislatures enact them, and legislatures are rarely monolithic. But, an attorney general can file a complaint or issue a subpoena with the stroke of their pen.

Tags: Attorneys General, CFPB, DOJ, FTC, Navigating the NEXT., Transition

‘Let’s Be Civil’: White House Due Process Memo May Improve Enforcement in Financial Regulatory Matters

By Michael A. Cumming , Nicholas M. Gess , Matthew S. Miner , Robin Nunn , Michael M. Philipp , and Eamonn K. Moran

// October 01, 2020

An August 31 memorandum issued by the Office of Information and Regulatory Affairs (OIRA), an arm of the Office of Management and Budget (OMB) within the Executive Branch, could dramatically change the way agencies handle civil and administrative enforcement proceedings. The memorandum directs covered agencies to provide greater due process to individuals and companies under investigation and reemphasizes the principle that the burden of proof of a violation rests solely with the government. The memorandum was issued to implement the directives contained in Section 6 of Executive Order 13924, Executive Order on Regulatory Relief to Support Economic Recovery (issued May 19, 2020). In relevant part, the executive order directed agency heads to revise agency procedures and practices in light of “the principles of fairness in administrative enforcement and adjudication.”

Tags: CFPB, Consumer Financial Services, FinTech, FTC, Innovation, OIRA, OMB, Regulation, SEC, States, Supervision and Examination, White House

FTC Settlement May Raise the Compliance Bar for Fintechs

By Michael A. Cumming , Nicholas M. Gess , David I. Monteiro , Eamonn K. Moran , Andrew M. Ray , and Daniel B. Tehrani

// April 23, 2020

The Federal Trade Commission (FTC) announced a settled action on April 22 with Canadian company RevenueWire (the Company) and its CEO to resolve allegations that the Company assisted and facilitated two tech-support scams that the FTC had previously targeted. Under the alleged scheme, consumers were marketed tech support services to “fix” nonexistent computer problems, leading to hundreds of millions of dollars of consumer injury. The FTC’s complaint and consent judgment maintain that, in addition to serving as a lead generator for the alleged fraudsters, the Company processed consumer credit card charges on their behalf.

Tags: Enforcement, Federal Trade Commission, FinTech, FTC, Innovation, Payment Processing, Regulation, Regulatory, States, Supervision and Examination, UDAP, Unfairness

Practical Considerations for the New CFPB: The Dodd-Frank Goose Meets Its Gander

By Nicholas M. Gess , Charles M. Horn , David I. Monteiro , and Michael A. Cumming

// November 30, 2017

The Great Schism at the Consumer Financial Protection Bureau (CFPB) is over, at least for now, and White House Office of Management and Budget Director Mick Mulvaney is now firmly in control of the agency as its acting director, having been appointed pursuant to the president’s authority under the Federal Vacancies Reform Act. He has imposed a hiring and regulations freeze and said that while he does not intend to “burn the place down,” he intends to ensure that the CFPB operates under a budget and consistent with other executive branch agencies.

For the time being, we expect that this will mean new rules will be put on hold and be scrutinized further, particularly for the burden they impose on regulated businesses. We also expect a more measured approach in enforcement matters, and that the CFPB’s examination functions will be better coordinated with those of other federal banking agencies, further easing compliance costs and burdens for the CFPB-regulated firms.

Tags: CFPB, Consumer Financial Protection Bureau, Federal Trade Commission, FTC, State AGs

In a Clear Signal to CFPB and White House, FTC Announces CID Process Improvements

By David I. Monteiro , Nicholas M. Gess , and Willard K. Tom

// July 18, 2017

Acting Federal Trade Commission (FTC) Chairman Maureen Ohlhausen has released a list of changes to how the agency’s Bureau of Consumer Protection (BCP) will issue civil investigative demands (CIDs)—the principal consumer protection investigative tool the agency wields. These changes result from Chairman Ohlhausen’s previously announced effort to reduce administrative burdens on legitimate businesses.

Tags: CFPB, Change in Washington, Consumer Financial Protection Bureau, Federal Trade Commission, FTC

After Its Promise to Dismantle CFPB, Administration’s More Reasoned Approach May Signal Less Change in Washington

By Nicholas M. Gess , Charles M. Horn , and David I. Monteiro

// June 14, 2017

One of President Donald Trump’s early official acts in February 2017 was to sign an executive order stating a series of “Core Principles” for the regulation of the US financial system and directing the secretary of the Treasury to report, in consultation with the members of the Financial Stability Oversight Council, on the extent to which existing laws, regulations, and other regulatory requirements promote the Core Principles. In response to the executive order, the US Department of the Treasury has just released a wide-ranging report (Report) addressing many aspects of current US financial regulation and recommending changes to the current regulatory framework.

Tags: CFPB, Consumer Financial Protection Bureau, FTC, State AGs, Treasury

CFPB’s ‘Bridge Too Far’ Becomes a Bridge to Nowhere

By Nicholas M. Gess , Charles M. Horn , and David I. Monteiro

// April 24, 2017

In a concise panel ruling (CFPB vs. Accrediting Council for Independent Colleges and Schools) that no doubt stings for the Consumer Financial Protection Bureau (CFPB), the US Court of Appeals for the DC Circuit has held that the CFPB failed to provide adequate notice of the purpose of a civil investigative demand (CID) it issued to an accrediting group for for-profit colleges, and has accordingly declined to enforce the CID.

The unanimous decision of the DC Circuit panel comes just a day shy of a year after a district court found that the CID was a “bridge too far.” As we reported at the time, that court also declined to enforce the CID.

Tags: CFPB, Change in Washington, Consumer Financial Protection Bureau, Federal Trade Commission, FTC, State AGs, UDAAP, UDAP

A ‘Parts’ Failure Leads to Penalties and Is ‘Unfair,’ Says the CFPB

By Nicholas M. Gess , Charles M. Horn , and David I. Monteiro

// February 03, 2017

Pushing the limits of its already broad and undefined consumer protection authority, the Consumer Financial Protection Bureau (CFPB) issued a Consent Order stating that MasterCard and UniRush, a prepaid card issuer, have engaged in “unfair acts or practices” by failing to conduct adequate testing and preparation for the conversion of UniRush’s RushCard prepaid card onto the Mastercard Payment Transaction Services (MPTS) platform. The CFPB has required the two respondents to pay $10 million in consumer restitution and $3 million in civil penalties, and to create a plan to avoid such problems in the future.

According to the consent settlement reached by MasterCard and UniRush, when technical problems arose during the transfer of RushCard’s operating platform to the MPTS platform in October 2015, many consumers who rely on RushCard for services such as direct deposit of their payroll were unable to access funds in a timely manner. In announcing the action, CFPB Director Richard Cordray stated that this failed systems conversion falls under the CFPB’s authority to penalize unfair, deceptive, and abusive acts and practices (UDAAP) under operative provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The CFPB press release announcing the action put the matter prosaically, saying, among other things, that the respondents “botched the processing of deposits and payments” during the conversion.

Tags: Consumer Financial Protection Bureau, Federal Trade Commission, FTC, State AGs, UDAAP, UDAP

Changes to CFPB’s Complaint Database May Increase Business Risk

By Nicholas M. Gess and Charles M. Horn

// August 03, 2016

On August 1, the Consumer Financial Protection Bureau (CFPB) published a Notice in the Federal Register seeking comment on a proposal to expand the information it gathers for its consumer complaint database to include complaint disposition information from consumers. This new information would include a 1–5 rating by the consumer as well as a narrative block. The proposal, however, does not include a data field for businesses to describe the relief provided, if any, or to otherwise respond to a consumer’s statements.

The CFPB characterizes this new information as a tool to permit the CFPB and other enforcement and regulatory agencies to assess efforts to remediate consumer complaints. Financial institutions and other businesses that may come within the ambit of this database, however, should be concerned that a one-sided consumer comment opportunity creates a cost-free, sortable, and mineable trove of possible cases for other regulatory and law enforcement agencies, including the Federal Trade Commission and state attorneys general, as well as plaintiffs’ lawyers seeking class action plaintiffs.

Tags: Banking, CFPB, Consumer Financial Services, FTC, State AGs

Editor

EXPLORE TOPICS