CFPB Digest - March 2016

3 min

CFPB Targets Student Debt Relief

The CFPB requested that a federal district court enter a final judgment that would shut down a student debt relief scheme that allegedly charged millions in illegal upfront fees for federal student loan services. This lawsuit, started in December 2014, alleged that the company charged consumers illegal upfront enrollment fees before providing any services, deceived customers about the costs of their services, and falsely represented an affiliation with the Department of Education. The proposed judgment would order the company to pay $8.2 million in refunds to its customers, require payment of a civil money penalty, cancel all contracts with consumers, and ban the company and its owner from any future debt relief or student loan services.

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CFPB Forays into Data Security – No Breach Required

First Bureau Data Security Enforcement Action Taken Against Dwolla

The Consumer Financial Protection Bureau (CFPB) announced a consent order (finalized on February 27, 2016) against Dwolla, Inc., an online payments platform, for deceptive acts relating to its data security practices. The enforcement action is the CFPB's first foray into regulating the data security practices of consumer financial service companies, an enforcement area where the Federal Trade Commission (FTC) has typically been more active in recent years.

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February 2016 Complaint Snapshot: Prepaid Products

The Consumer Financial Protection Bureau (CFPB) has issued its February 2016 Complaint Snapshot. The Snapshot's product spotlight covers Prepaid Products.

Prepaid products are a type of consumer financial products that serve unbanked and under-banked households. These alternative consumer accounts can be loaded with funds by either a consumer or a third party and allow people to make payments, store funds, and withdraw cash.

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The CFPB Begins Taking Complaints about Marketplace Lenders

On March 7, 2016, the Consumer Financial Protection Bureau (CFPB) announced that it will be accepting complaints from consumers about the marketplace lending industry. The CFPB also released a consumer bulletin providing an overview of marketplace lending and tips for consumers applying for credit through these websites.

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CFPB Enforcement Settlement Principles Revealed

When companies are faced with a Consumer Financial Protection Bureau (CFPB or Bureau) investigation and threatened with litigation over alleged violations of consumer financial law, often there is the potential to reach a negotiated settlement. But settling a CFPB enforcement action presents a number of unique challenges, including the CFPB's internal priorities and philosophy regarding the use of negotiated settlements to resolve enforcement matters. This article examines these dynamics.

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Government Puts Squeeze on Lead Generation Marketing

Online lead generation continues to face increased scrutiny and regulation on multiple fronts, including from consumer groups, state regulators, the Federal Trade Commission (FTC), and the Consumer Financial Protection Bureau (CFPB). This squeeze is being felt by all participants—publishers, aggregators, and buyers—and, notably, the lines of legal responsibility and accountability continue to blur. All told, the viability of some forms of online lead generation is at stake.

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Upcoming Events:

April 24–27, 2016 – "Legal and Regulatory Update: Spotlight on the Consumer Financial Protection Bureau (CFPB) Regulation of the Debt and Credit Markets" at the Financial Counseling Association of America 2016 Conference

June 17, 2016 – "CFPB Turns Five: The Evolving Legal and Regulatory Landscape for Debt Collection" at the 2016 ACA International Convention & Expo