CFPB’s final investigations rules still disfavor extensions for challenging CIDs

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We were disappointed to see that the CFPB’s final Rules Relating to Investigations still include the statement that “requests for extensions of time [to petition for an order modifying or setting aside civil investigative demands (CIDs)] are disfavored.” 

The CFPB says that its policy of disfavoring extensions “means to prompt recipients to decide within 20 days whether they intend to comply with the CID.” We think the CFPB is being short-sighted in its quest for efficiency because it will result in lost opportunities for compromise. A company faced with a CID that includes a broad request and seeks large volumes of electronically-stored information needs time to assess the scope of the request and explore options (such as limiting custodians, using sampling, reducing time frames). Exploring these alternatives takes time, because each alternative needs to be tested to see if it will achieve the desired document production with the minimal amount of burden. By rushing the process to an artificially-set conclusion date, the CFPB will be forcing companies to file a petition to set aside a CID when further discussions might have resulted in a compromise.   

The CFPB notes that the 20-day period “only provides the due date for a petition for an order modifying or setting aside a CID” and that it does not require companies “to comply fully with CIDs within 20 days.” What the CFPB seems to fail to recognize is the possibility that companies may have reasonable objections to the scope of its CIDs that could be resolved through cooperation, but the “extensions are disfavored” rule cuts off opportunities for that cooperation because it forces the recipient of a CID to either challenge it, or give up its right to pursue a challenge, within a time frame that is not sufficient to explore all of the options in connection with a CID that seeks substantial electronic documents. In our view, the approach the CFPB has decided to take is neither in the CFPB’s best interests nor the interests of CID targets.

Published In: Administrative Agency Updates, Civil Procedure Updates, Consumer Protection Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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