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CFPB Denied

November 11, 2015

Authors

Robert Klingler

CFPB Denied

November 11, 2015

by: Robert Klingler

Invoking memories of Apple’s famed 1984 Superbowl commercial, a group called the American Action Network aired an anti-CFPB spot during last night’s Republican presidential debate. If nothing else, the spot should encourage further discussion of the role and impact of the Consumer Financial Protection Bureau.

The spot certainly portrays the CFPB in an evil light that is sure to please many in the banking industry, but its broader impact is less certain. A well-written piece by the American Banker offers several reasons why the ad could backfire, not the least of which is the hyperbolic nature of (and shortcuts taken by) the spot.

And former FDIC Chair Sheila Bair seems to agree.

@ABWashBureau Not smart. This will solidify CFPB supporters and imply GOP is anti-consumer, which it isn't.

— Sheila Bair (@SheilaBair2013) November 10, 2015

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CFPB “Guidance” on Marketing Services Agreements

October 19, 2015

Authors

Bryan Cave

CFPB “Guidance” on Marketing Services Agreements

October 19, 2015

by: Bryan Cave

On October 8, 2015, the CFPB announced new “Guidance About Marketing Services Agreements,” publishing a Compliance Bulletin on the subject of RESPA Compliance and Marketing Services Agreements.  The Bulletin is lacking in clear “guidance,” at least in the sense of outlining regulatory standards, but it does provide an unequivocal warning that marketing services agreements (MSAs) in the mortgage industry are much less likely to pass regulatory scrutiny than in the past.

The CFPB expresses “grave concerns” about the use of MSAs to evade the requirements of RESPA, and they note that certain mortgage industry participants have already stopped entering into MSAs given the RESPA compliance burdens.  To ensure that the industry is getting the message, they warn that careful consideration of the legal and compliance risks “would be in order” for all industry participants, especially in light of the increase in whistleblower complaints under RESPA.

Every MSA must

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Hefty Fine Against Major Bank Reminds Companies Offering Add-On Products that the CFPB Is Watching

October 15, 2015

Authors

Seyi Iwarere

Hefty Fine Against Major Bank Reminds Companies Offering Add-On Products that the CFPB Is Watching

October 15, 2015

by: Seyi Iwarere

The CFPB has issued another enforcement action exceeding the half-billion dollar mark against a large bank for its add-on product offerings. Citibank and its subsidiaries were penalized for alleged deceptive marketing, unfair billing and deceptive debt collection involving its credit card add-on products and services. This marks the tenth public enforcement action that the CFPB has announced for practices associated with marketing or administering add-on products in its four-year history.

As part of the settlement Citi was ordered to pay $700 million in restitution to about 8.8 million consumers who were impacted by the add-on product offerings. The company also must pay the CFPB a $35 million civil penalty. Further, the Bank was required to end alleged unfair billing practices and submit a compliance plan to the CFPB before continuing to market any add-on products by telephone or point of sale, or attempting to retain add-on product customers by

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Will High Impact Perspectives Shape Litigation Risk? CFPB RESPA Enforcement Appeal

June 11, 2015

Authors

Douglas Thompson

Will High Impact Perspectives Shape Litigation Risk? CFPB RESPA Enforcement Appeal

June 11, 2015

by: Douglas Thompson

Litigators often talk to clients about the power of judges and juries. The first Decision of Director issued by CFPB’s Richard Cordray should give counselors and clients alike pause. Pause first because of the ultimate outcome ($109 million disgorgement) and interpretations of RESPA offered. And pause second (perhaps more importantly) because of the focused perspectives announced by the Director and their potential to activate others. With all due respect to the Director and the administrative appeal process, the Director clearly is taking advantage of this opportunity to make known his beliefs. Like a jury or a judge he is meting out justice the way he sees fit. What is fascinating, just like polling a jury after the verdict, is looking for the perspectives which drove the result. The Decision presents yet another glimpse of the Director who now shapes not just CFPB supervision and examination, but also may shape going forward

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Announcing the Consumer Banking Blog

June 5, 2015

Authors

Robert Klingler and Seyi Iwarere

Announcing the Consumer Banking Blog

June 5, 2015

by: Robert Klingler and Seyi Iwarere

It is with great pleasure that we announce that we have launched a new blog on consumer banking compliance issues.  Authored by Bryan Cave Partner, John ReVeal, the ConsumerBankingBlog provides commentary and perspective on new and proposed consumer compliance regulations, regulatory enforcement actions and trends, and the shenanigans of banking regulators.  With John’s unique, unfiltered, opinions, we think you’ll find the ConsumerBankingBlog to be very different from your typical banking compliance site.

John’s goal for the ConsumerBankingBlog is to foster discussion – an open exchange of ideas between readers and John.  Comments are strongly encouraged… subject to the site’s Rules for Comments, of course.  (We’re still lawyers, after all.)

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CFPB Continues Scrutiny on Student Loan Servicing

May 26, 2015

Authors

Steven Smith and Greg Sachnik

CFPB Continues Scrutiny on Student Loan Servicing

May 26, 2015

by: Steven Smith and Greg Sachnik

In a recent press release, the CFPB announced a public inquiry into student loan servicing.  The CFPB is seeking information about: “industry practices that create repayment challenges, hurdles for distressed borrowers and economic incentives that may affect the quality of service.”  According to the CFPB, student loans account for the nation’s second largest consumer debt market.  The agency states there are more than 40 million federal and private student loan borrowers and those consumers owe more than $1.2 trillion.  About $240 billion in such loans are either in default or forebearance.

The CFPB is acting because of numerous borrower complaints about their loan servicers.  Complaints include billing problems associated with payment posting, prepayments and partial payments.  Borrowers have stated that payments have been processed in ways that make their borrowing more expensive.  Servicers are also accused of losing records and slow response times to fix errors.  The CFPB thinks

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Bank Regulators take Aim at Payday Lenders and AML Control

April 21, 2015

Authors

Bryan Cave

Bank Regulators take Aim at Payday Lenders and AML Control

April 21, 2015

by: Bryan Cave

In two recent posts on BryanCavePayments.com, Bryan Cave attorneys have addressed new developments related to the CFPB’s efforts to regulate payday lenders through their banking relationships as well as statements from New York’s top banking regulators suggesting that bank executives should be held personally liable for anti-money laundering violations.

On April 1st (but unfortunately not part of any April Fools joke), John Reveal published a post on the CFPB’s efforts against payday lenders.

In May 2014, the Department of Justice (DOJ) and the FDIC were criticized by the U.S. House of Representatives’ Committee on Oversight and Government Reform in May 2014 Report for using the DOJ’s “Operation Choke Point” to force banks out of providing services to payday lenders and other “lawful and legitimate merchants”. The Committee’s report noted, among other things, that the DOJ was inappropriately demanding, without legal authority, that “bankers act as the moral arbiters

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Speculation Abounds on CFPB’s Next Step on Arbitration Clauses

April 7, 2015

Authors

Seyi Iwarere

Speculation Abounds on CFPB’s Next Step on Arbitration Clauses

April 7, 2015

by: Seyi Iwarere

You might have seen it this March in the New York Times: an article about American troops having their vehicles repossessed by auto lenders while on active duty, and the troops being unable to fight repossession in court because of mandatory arbitration clauses  in their lending contracts.

The poignant story on vets and car repossession is just one piece in the ongoing discussion about what actions the CFPB will take regarding provisions in consumer contracts limiting the consumer to arbitration in the event of a future dispute, referred to as “pre-dispute arbitration clauses.” Under Section 1028 of Dodd-Frank, the CFPB was required to conduct a study on use of arbitration clauses in connection with offering consumer financial products and services. If, through study, the CFPB finds that prohibiting or limiting the clauses in agreements between market participants it regulates and consumers “is in the public interest and for the

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Implications of CFPB’s Reminder regarding Confidentiality of Examination Materials

April 1, 2015

Authors

Steven Smith and Lauren Caisman

Implications of CFPB’s Reminder regarding Confidentiality of Examination Materials

April 1, 2015

by: Steven Smith and Lauren Caisman

On January 27, 2015, the Consumer Financial Protection Bureau (“CFPB”) issued Compliance Bulletin 2015-01 as a “reminder” of certain confidentiality and disclosure requirements related to CFPB examinations and investigations.  Though the CFPB’s Bulletin did not cite examples of historic violations, those subject to the CFPB’s authority should assess their practices, particularly in litigation, with respect to the disclosure of information and be sensitive to the Bulletin’s message in doing so.

The Bulletin provides warnings of two types of potential violations.  One type arises out of a financial institution’s obligations with respect to “confidential supervisory information (CSI).” Examples of CSI include but are not limited to:

  • CFPB examination reports and supervisory letters;
  • All information contained in, derived from, or related to those documents, including an institution’s supervisory Compliance rating;
  • Communications between the CFPB and the supervised financial institution related to the CFPB’s examination of the institution or other supervisory
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Complying with the Rules When Posting Privacy Notices Online

March 16, 2015

Authors

Bryan Cave

Complying with the Rules When Posting Privacy Notices Online

March 16, 2015

by: Bryan Cave

On October 28, 2014, the CFPB amended the consumer privacy rules of Regulation P to allow financial institutions to post privacy notices online rather than mailing the required annual notice each year.  Some institutions are already taking advantage of this alternate delivery method.  There are conditions to this option, however, and some institutions might not be satisfying those conditions.  It is important to confirm that your institution is meeting the following conditions if you have decided to take advantage of the new rule:

  • No Opt Outs.  The alternate delivery method can be used only if you do not share your customers’ information in any way for which the customer has the right to opt out under Regulation P or Section 603(d)(2)(A)(iii) of the Fair Credit Reporting Act (FCRA).  This provision of the FCRA is the one under which information that otherwise would be a “consumer report,” such as credit
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