October 8, 2015

CFPB Enforcement Activity and Policy Guidance Targets Debt Relief Services, Indirect Auto Lending, Credit Card Add-on Products, and Student Loan Servicing

3 min

CFPB Proposes Limitations and Requirements for Arbitration Agreements

On October 7, the Consumer Financial Protection Bureau (CFPB) released an outline of its proposal for a possible rule regarding arbitration clauses in consumer financial product and service agreements.

There are two elements to the CFPB's proposal: (1) Elimination of agreements blocking consumer participation in class actions and (2) submission to the CFPB (and potentially public posting) of arbitral claims and awards.

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CFPB Shuts Down Debt Relief Services Company

On September 15, the CFPB filed suit against the World Law Group, alleging violations of the Consumer Financial Protection Act (CFPA) and the Telemarketing Sales Rule (TSR). On September 2 and 14, the CFPB was granted temporary restraining orders against the World Law Group companies and certain personnel, halting the World Law Group's business operations and freezing its assets, as well as the assets of the named individuals. The restraining orders also appoint a receiver for the business activities of the World Law Group.

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CFPB Issues Revised TILA Regulations Relating to Creditors and Rural Areas

On September 21, the CFPB issued its revised Truth in Lending Act regulations (Regulation Z) relating to creditors and rural or underserved areas. The CFPB's final rule revised the regulatory definitions of small creditor, and rural and underserved areas, for purposes of certain special provisions and exemptions from various requirements provided to certain small creditors under the CFPB's mortgage rules.

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CFPB Expands Foray into Indirect Auto Lending Enforcement

The CFPB has warned that the indirect auto lending industry has been a target of CFPB supervisory and investigative scrutiny. In March 2013, the CFPB issued a bulletin explaining that it would hold indirect auto lenders accountable for unlawful discriminatory pricing. The CFPB highlighted that its enforcement action against the bank is part of a larger joint effort by the CFPB and DOJ to address discrimination in the indirect auto lending market. Industry participants are likely to see additional scrutiny and enforcement activity from both the CFPB and DOJ.

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Continued CFPB Focus on Credit Card Add-on Products Yields $3 Million Penalty and Enhanced Board Oversight

On September 28, the CFPB settled with Fifth Third Bank over allegations of improper credit card add-on products that the CFPB alleged violated federal consumer protections laws. Credit card add-on products have been a consistent focus for the CFPB, which notes that its action against Fifth Third "is the 11th credit card add-on enforcement action the Bureau has taken against companies for illegal practices in the marketing or administration of add-on products and services."

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CFPB Report and Joint Statement of Principles for Student Loan Servicing Presage Potential Rulemaking Activity

On September 29, the CFPB released a report on student loan servicing. The report is the result of the Bureau's May 2015 public inquiry into student loan servicing. Noting the breadth of and continuing distress of the student loan industry, the CFPB stated in its press release that the Bureau intends "to explore potential industry-wide rules to increase borrower protections."

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CFPB Monthly Complaint Snapshot – Month of Mortgages

The CFPB's monthly complaint snapshot focused on the mortgage industry. The CFPB states that as of September 1, it handled approximately 192,500 mortgage-related complaints.

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For more information, please contact Venable's CFPB Task Force.