How to Respond to a CFPB Civil Investigative Demand

Under CFPB’s broad mandate, many companies outside the financial services industry may be subject to expensive civil investigations.

A for-profit technical school may not appear to be a financial services company. But a recent investigation and enforcement action brought against ITT Education Services by the Consumer Financial Protection Bureau (CFPB) suggests that CFPB takes a broad view of its authority to regulate consumer financial products and services, and will not limit its enforcement activities to the financial services industry.

Congress created the CFPB in the Wall Street Reform and Consumer Protection Act of 2010 — a law designed to prevent the practices Congress felt led to the financial crisis (e.g., subprime mortgage lending and the securitization of subprime mortgages). Among other things, the CFPB was created to enforce Dodd-Frank, and centralize oversight of the various existing consumer financial protection laws (e.g., the Fair Debt Collection Practices Act and the Fair Credit Reporting Act). Dodd-Frank itself authorizes CFPB to bring enforcement actions against acts or practices in connection with a consumer financial product that are “unfair, deceptive, or abusive.” 12 U.S.C. 5531.

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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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