Source: https://www.paulhastings.com/publications-items/details/?id=8a01e869-2334-6428-811c-ff00004cbded
Timestamp: 2020-03-29 08:53:09
Document Index: 118086493

Matched Legal Cases: ['§ 3801', '§ 1667', '§ 1693', '§ 920', '§ 1691', '§ 1666', '§ 1681', '§ 1681', '§ 1692', '§ 1831', '§ 6802', '§ 2801', '§ 4901', '§ 1601', '§ 1701', '§ 987', '§ 2601', '§ 5101', '§ 1601', '§ 4301', '§ 5514', '§ 5481', '§ 5531', '§ 1']

By Gerald S. Sachs, Lawrence D. Kaplan & Kristin S. Teager
The CFPB’s Project Catalyst Office, which seeks to engage with those developing innovative financial services and products,[4] did not undertake any public projects this year. However, we are aware of a number of regulated entities that have met with the Bureau through Project Catalyst to discuss regulatory concerns and potential collaboration with the CFPB. We anticipate that 2016 will be a more active year for Project Catalyst and that we will see the issuance of No Action letters this year.[5]
Small Dollar, Installment, and Auto Title Lending: In 2015, the CFPB released an outline of a possible proposed rule to the Small Business Advisory Review Panel, shedding light on the likely components of a rule expected to be proposed in 2016.[19] The guidance issued indicated that the CFPB will likely require certain safeguards or debt trap preventions. For example, small dollar lenders would be required to make an ability-to-repay determination and verify consumer information including income, credit history, and other financial obligations before lending.[20]
Arbitration: Under Section 1028 of the Dodd-Frank Act, the CFPB released an in-depth two part arbitration study in 2015,[22] indicating that a rulemaking is likely to follow in the near future. Notwithstanding the fact that the Federal Arbitration Act[23] and Supreme Court precedent[24] support the use of arbitration clauses in commercial and consumer contracts, based on the Dodd-Frank study, the CFPB appears ready to limit the use of pre-dispute arbitration contracts related to consumer financial products and services. Specifically, the CFPB appears to be proposing that with regard to consumer financial products and services contracts, there can be no class action waiver, and pre-dispute arbitration cannot be mandatory but only used after class action certification has been denied or dismissed. The CFPB bases much of its rationale for this type of regulation on the fact that class actions are necessary to stop consumer harm that is not addressed by regulators.[25] Ironically, the entire CFPB data pool pre-dates the Dodd-Frank Act and the CFPB’s existence. Surely, this data would reflect different results, taking into consideration the extensive supervisory and enforcement activity of the CFPB (and the state attorneys general availing themselves of their Dodd-Frank authority).[26] We expect a proposed rule to come out in 2016.
In the light of new TRID rules, the Bureau’s 2015 guidance concerning RESPA violations and Marketing Services Agreements,[36] and recent press on fair lending issues related to manufactured housing,[37] we believe the CFPB will focus on markets where it has unquestionable jurisdiction—such as mortgage lending, credit cards, student lending, debt collection, and credit reporting. Moreover, we expect the CFPB to bring at least a few auto finance actions stemming from its newly created authority to conduct supervisory examinations of certain larger non-bank auto finance companies.[38] However, the Bureau’s foray into auto lending[39] will likely be toned down, particularly in light of the recent Congressional action to nullify the CFPB’s 2013 Bulletin[40] on indirect auto lending.[41]
[1] Alternative Mortgage Transaction Parity Act (12 U.S.C. § 3801 et seq.); Consumer Leasing Act (15 U.S.C. § 1667 et seq.); Electronic Fund Transfer Act (15 U.S.C. § 1693 et seq.—excluding § 920); Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.); Fair Credit Billing Act (15 U.S.C. § 1666 et seq.); Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.—excluding §§ 1681m(e) and 1681w); Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.); Federal Deposit Insurance Act (in part) (12 U.S.C. § 1831t(b)–(f)); Gramm-Leach-Bliley Act (15 U.S.C. §§ 6802-6809—in part); Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.); Home Owners Protection Act (12 U.S.C. § 4901 et seq.); Home Ownership and Equity Protection Act (15 U.S.C. § 1601 note); Interstate Land Sales Full Disclosure Act (15 U.S.C. § 1701); Military Lending Act (10 U.S.C. § 987); Omnibus Appropriations Act, 2009, Section 626 (Public Law 111-8); Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.); S.A.F.E. Mortgage Licensing Act (12 U.S.C. § 5101 et seq.); Truth in Lending Act (15 U.S.C. § 1601 et seq.); Truth in Savings Act (12 U.S.C. § 4301 et seq.).
[2] All figures are approximations obtained from CFPB press releases, available at http://www.consumerfinance.gov/newsroom.
[3] 12 U.S.C. §§ 5514-16.
[4] http://www.consumerfinance.gov/projectcatalyst/; http://www.consumerfinance.gov/newsroom/consumer-financial-protection-bureau-launches-project-catalyst-to-spur-consumer-friendly-innovation/.
[5] http://files.consumerfinance.gov/f/201410_cfpb_proposed-policy_no-action-letters.pdf.
[6] CFPB Summer 2015 Supervisory Highlights, available at http://files.consumerfinance.gov/f/201506_cfpb_supervisory-highlights.pdf; CFPB Fall 2015 Supervisory Highlights, available at http://files.consumerfinance.gov/f/201510_cfpb_supervisory-highlights.pdf.
[7] http://files.consumerfinance.gov/f/201508_cfpb_tila-respa-integrated-disclosure-rule.pdf.
[8] http://files.consumerfinance.gov/f/201506_cfpb_supervisory-highlights.pdf.
[9] http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-wells-fargo-and-jpmorgan-chase-for-illegal-mortgage-kickbacks/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-newday-financial-for-deceptive-mortgage-advertising-and-kickbacks/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-mortgage-companies-for-misrepresenting-u-s-government-affiliation/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-mortgage-lender-for-deceptive-advertising/; http://www.consumerfinance.gov/newsroom/cfpb-and-department-of-justice-take-action-against-provident-funding-associates-for-discriminatory-mortgage-pricing/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-guarantee-mortgage-for-loan-originator-compensation-violations/; http://www.consumerfinance.gov/newsroom/cfpb-and-doj-order-hudson-city-savings-bank-to-pay-27-million-to-increase-mortgage-credit-access-in-communities-illegally-redlined/.
[10] http://www.consumerfinance.gov/newsroom/cfpb-and-federal-trade-commission-take-action-against-green-tree-servicing-for-mistreating-borrowers-trying-to-save-their-homes/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-mortgage-company-for-blocking-consumers-attempts-to-save-their-homes/; http://www.consumerfinance.gov/newsroom/cfpb-files-suit-against-nationwide-biweekly-for-luring-consumers-with-false-promises-of-mortgage-savings/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-mortgage-payment-company-and-servicer-for-deceptive-ads/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-mortgage-payment-company-and-servicer-for-deceptive-ads/.
[11] http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-military-allotment-processor-for-charging-servicemembers-hidden-fees/; http://www.consumerfinance.gov/newsroom/cfpb-sues-offshore-payday-lender/; http://www.consumerfinance.gov/newsroom/cfpb-and-navajo-nation-take-action-to-stop-an-illegal-tax-refund-scheme/; http://www.consumerfinance.gov/newsroom/cfpb-and-new-york-department-of-financial-services-sue-pension-advance-companies-for-deceiving-consumers-about-loan-costs/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-online-lender-for-deceiving-borrowers/.
[12] http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-bad-check-debt-collector/; http://www.consumerfinance.gov/newsroom/cfpb-sues-participants-in-robo-call-phantom-debt-collection-operation/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-servicemember-auto-lender-for-aggressive-debt-collection-tactics/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-medical-debt-collector/; http://www.consumerfinance.gov/newsroom/cfpb-orders-discover-bank-to-pay-18-5-million-for-illegal-student-loan-servicing-practices/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-the-two-largest-debt-buyers-for-using-deceptive-tactics-to-collect-bad-debts/; http://www.consumerfinance.gov/newsroom/cfpb-orders-indirect-auto-finance-company-to-provide-consumers-44-1-million-in-relief-for-illegal-debt-collection-tactics/; http://www.consumerfinance.gov/newsroom/cfpb-orders-servicemember-auto-loan-company-to-pay-3-28-million-for-illegal-debt-collection-tactics/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-debt-collector-for-pursuing-disputed-and-unverified-cellphone-debts/; http://www.consumerfinance.gov/newsroom/cfpb-orders-ezcorp-to-pay-10-million-for-illegal-debt-collection-tactics/.
[13] http://www.consumerfinance.gov/newsroom/cfpb-and-doj-reach-resolution-with-honda-to-address-discriminatory-auto-loan-pricing/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-fifth-third-bank-for-auto-lending-discrimination-and-illegal-credit-card-practices/; https://www.autofinancesettlement.com/.
[14] http://www.consumerfinance.gov/newsroom/cfpb-takes-action-to-obtain-120-million-in-redress-from-sprint-and-verizon-for-illegal-mobile-cramming/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-paypal-for-illegally-signing-up-consumers-for-unwanted-online-credit/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-companies-for-unfair-billing-of-credit-card-add-on-products-and-services/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-student-financial-aid-services-inc-for-illegal-recurring-billing-scheme/; http://www.consumerfinance.gov/newsroom/cfpb-orders-citibank-to-pay-700-million-in-consumer-relief-for-illegal-credit-card-practices/.
[15] http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-student-financial-aid-services-inc-for-illegal-recurring-billing-scheme/.
[16] 12 U.S.C. § 5481 et seq
[17] The CFPB proposed rulemaking agenda can be found at http://www.consumerfinance.gov/newsroom/cfpb-to-oversee-nonbank-auto-finance-companies/.
[18] https://www.federalregister.gov/articles/2014/12/23/2014-27286/prepaid-accounts-under-the-electronic-fund-transfer-act-regulation-e-and-the-truth-in-lending-act.
[19] http://www.paulhastings.com/publications-items/details/?id=9cf2e369-2334-6428-811c-ff00004cbded.
[20] http://files.consumerfinance.gov/f/201503_cfpb_outline-of-the-proposals-from-small-business-review-panel.pdf.
[21] Section 1031 of the Dodd-Frank Act authorizes the CFPB to issue rules to identify and prevent unfair, deceptive, or abusive acts or practices in the consumer financial markets. See 12 U.S.C. § 5531(b).
[22] http://files.consumerfinance.gov/f/201503_cfpb_arbitration-study-report-to-congress-2015.pdf.
[23] The Federal Arbitration Act, 9 U.S.C. § 1 et seq.
[24] DirectTV, Inc. v. Imburgia, 136 S.Ct. 463 (2015); America Express Co., v. Italian Colors Restaurant, 133 S.Ct. 2304 (2013); AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011).
[25] Consumer Financial Protection Bureau, Small Business Advisory Review Panel for Potential Rulemaking on Arbitration Agreements: Outline of Proposals Under Consideration and Alternatives Considered, (Oct. 7, 2015).
[26] Section 1042 of the Dodd-Frank Act empowers attorney generals and other state regulatory authorities to file lawsuits against potentially unlawful practices committed by bank and non-bank regulated entities.
[27] http://files.consumerfinance.gov/f/201311_cfpb_anpr_debtcollection.pdf.
[28] http://www.consumerfinance.gov/newsroom/cfpb-takes-action-to-stop-illegal-debt-collection-lawsuit-mill/.
[29] http://files.consumerfinance.gov/f/201512_cfpb_compliance-bulletin-in-person-collection-of-consumer-debt.pdf.
[30] http://www.insidearm.com/wp-content/uploads/CFPB-Full-Survey-Comment-entry-2014-0005-0003.pdf?e053bb.
[31] Student loans are second largest class on consumer debt behind mortgages, with one in four student loan borrows currently delinquent or in default. http://files.consumerfinance.gov/f/201403_cfpb_report_payday-lending.pdf.
[32] http://files.consumerfinance.gov/f/201509_cfpb_treasury_education-joint-statement-of-principles-on-student-loan-servicing.pdf.
[33] http://files.consumerfinance.gov/f/201509_cfpb_student-loan-servicing-report.pdf.
[34] While the CFPB restated the Fair Credit Reporting Act regulations in December 2011, it made no changes to the previous FTC regulations.
[35] The Fair and Accurate Credit Transaction Act, Pub. L. 108-159.
[36] http://www.paulhastings.com/publications-items/details/?id=e75de769-2334-6428-811c-ff00004cbded.
[37] http://www.seattletimes.com/seattle-news/times-watchdog/minorities-exploited-by-warren-buffetts-mobile-home-empire-clayton-homes/.
[38] http://www.consumerfinance.gov/newsroom/cfpb-to-oversee-nonbank-auto-finance-companies/.
[39] http://www.wsj.com/articles/u-s-house-panel-seeks-data-on-auto-lending-discrimination-claims-1444415227.
[40] http://files.consumerfinance.gov/f/201303_cfpb_march_-Auto-Finance-Bulletin.pdf.
[41] https://www.congress.gov/bill/114th-congress/house-bill/1737.
[42] http://files.consumerfinance.gov/f/201512_cfpb_report-the-consumer-credit-card-market.pdf.
[43] http://www.consumerfinance.gov/blog/category/project-catalyst/.
[44] See 2015 actions related to service members, http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-mortgage-lender-for-deceptive-advertising/; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-military-allotment-processor-for-charging-servicemembers-hidden-fees; http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-servicemember-auto-lender-for-aggressive-debt-collection-tactics/; http://www.consumerfinance.gov/newsroom/cfpb-orders-servicemember-auto-loan-company-to-pay-3-28-million-for-illegal-debt-collection-tactics/.
[45] http://www.consumerfinance.gov/newsroom/cfpb-orders-discover-bank-to-pay-18-5-million-for-illegal-student-loan-servicing-practices/.
[46] http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-wells-fargo-and-jpmorgan-chase-for-illegal-mortgage-kickbacks/; http://www.consumerfinance.gov/newsroom/cfpb-and-doj-reach-resolution-with-honda-to-address-discriminatory-auto-loan-pricing/.
[47] http://www.paulhastings.com/publications-items/details/?id=13d0e369-2334-6428-811c-ff00004cbded.