Inside the CFPB Enforcement Policies and Procedures Manual, movement toward a debt collection proposal, and more in this issue of CFPB Digest

5 min

Upcoming Events

"UDAAP: The CFPB's Emerging and Evolving Doctrine," a Venable Webinar — Allyson B. Baker, Meredith L. Boylan, Katie M. Wright (October 5, 2016). Learn more here.

"The Future of Online Advertising and Marketing for Consumer and Business Lending" at the Lend360 conference — Alexandra Megaris, Allyson B. Baker (October 6, 2016). Learn more here.

"Trends for CFPB Enforcement and Supervision" at the NASCUS 2016 Summit — Allyson B. Baker (October 6, 2016). Learn more here.

"Enhancing a CMS In the Real World" at the 2016 ACA International Fall Forum & Expo — Alexandra Megaris, Jonathan L. Pompan (November 11, 2016). Learn more here.

"The Latest RESPA and TILA Developments: CFPB Final Rule Changes That Are Impacting Regs X and Z, Implementation Challenges, Claims Trends and Best Practices for Compliance in Early Intervention, Loss Mitigation, Periodic Statements and Beyond" at the American Conference Institute's 6th Bank & Non-Bank Forum on Mortgage Servicing Compliance.

CFPB Comment Period Deadlines

  • Small-Dollar Lending – October 7, 2016: Comments due in response to a proposed rule addressing payday, vehicle title, and other high-cost installment loans and establishing 12 CFR 1041. For Venable's prior discussion of this proposed rule, please see our Small-Dollar Loan Proposed Rule FAQs.
  • TRID/KBYO Amendments – October 18, 2016: Comments due in response to a proposed rule updating the CFPB's TILA-RESPA Integrated Disclosure (TRID) rule. Highlights of the proposed updates are discussed here.
  • Confidential Information Disclosure – October 24, 2016: Comments due in response to a proposed rule revising the CFPB's requirements and restrictions regarding the disclosure of confidential information, including confidential supervisory information. Learn more about the CFPB's proposal.

In Brief – September 2016

A Look Inside the Official CFPB Enforcement Policies and Procedures Manual

The CFPB's Enforcement Policies and Procedures Manual was recently released in partially redacted form in response to a Freedom of Information Act request. Since its launch in 2011, the Consumer Financial Protection Bureau (CFPB or Bureau) has developed a reputation for its aggressive investigation and litigation tactics. The Bureau's Enforcement Policies and Procedures Manual for its enforcement staff provides a peek behind the curtain at how CFPB enforcement actions unfold.

Despite the CFPB's push for transparency, a copy of the 390-page document is not available on its otherwise comprehensive website. (By comparison, the Federal Trade Commission (FTC) has for many years made available its Operating Manual as a public record.)

Following sections on document maintenance and retention policies, the manual includes a discussion of its policies governing the conduct of investigations, litigation, remedies, adjudicative proceedings, working with other law enforcement partners, practice guidance, and administrative issues, as well as model forms and sample language used in investigations and litigation by CFPB enforcement staff.

For more information, please see Venable's overview of the CFPB's Enforcement Policies and Procedures Manual.

Post-Spokeo: A Lack of Concrete Injury Dooms Federal Data Privacy Class Claims

The Supreme Court, in Spokeo, Inc. v. Robins, held that a plaintiff does not have Article III standing under the FCRA and other federal statutes if the plaintiff does not sufficiently allege a concrete injury. The 8th Circuit recently affirmed a dismissal of class claims alleging violations of a federal data protection statute, and became the first federal appellate decision to apply Spokeo and hold that Article III of the U.S. Constitution "requires a concrete injury even in the context of a statutory violation," and such requirement is not automatically satisfied where a statute grants a statutory right and authorizes private lawsuits to enforce it. Venable recently wrote on this case. Spokeo will continue to have far-reaching effects on potential class actions facing consumer finance companies.

CFPB Moves Toward Debt Collection Proposal

A Small Business Regulatory Enforcement Fairness Act (SBREFA) panel, charged with reviewing the CFPB's framework for a debt collection rule proposal, met in late August. The panel must submit its report 60 days after being convened; accordingly, the report is expected in early October 2016. However, it will not become public until the CFPB issues its proposed rule. Venable recently wrote on the outline of proposals prepared for the SBREFA panel.

In Depth – September 2016

"True Lender" Troubles – More Uncertainty for Partner Origination Models

On August 31, 2016, the U.S. District Court for the Central District of California granted the CFPB's motion for summary judgment against CashCall, an online small-dollar consumer finance company. Under the "true lender" analysis, the court held that CashCall's loans were void under the usury laws in sixteen states, and that by attempting to collect on those loans, CashCall had violated the Dodd-Frank Act's prohibition on unfair, deceptive, and abusive acts and practices (UDAAP). However, in Beechum, the same California District Court, in a class action suit alleging that a non-bank entity violated usury laws through its partnership with an originating bank, refused to engage in a true lender analysis under an exemption in California usury law for banks.

CashCall, Beechum, and other recent "true lender" cases are critical for lenders looking to reduce risk in a fractured regulatory landscape. Moreover, the Bureau's approach in CashCall furthers the CFPB's new theory of UDAAP liability. Read more about these issues here.

Compliance Deadline Nears for MLA Rules

The Department of Defense's (DoD's) Military Lending Act (MLA) rule goes into effect for most lending products on October 3, 2016. The final rule has been updated with interpretative guidance from the DoD issued in late August 2016. The DoD worked closely with the CFPB in developing the final rule. The Bureau has authority to enforce the MLA against lenders through its TILA enforcement authority and can address MLA compliance in examinations. Read more about DoD's guidance here.