Target of CFPB Complaint Loses Argument on Unconstitutionality


The United States District Court for the Central District of California denied a motion to dismiss brought by a target of the CFPB’s enforcement powers. In August 2013, the CFPB filed a complaint against a debt relief-service company for violations of the Telemarketing Sales Rule (see September 3, 2013 Alert) and alleging that the company engaged in deceptive and unfair practices in violation of the Dodd-Frank Act. The company subsequently moved to dismiss the complaint on the grounds that the CFPB, as an agency, was unconstitutional, and that the CFPB did not state a claim for which relief could be granted. In particular, the company argued the CFPB’s structural features, including, among other things, the fact that the President could only remove the CFPB Director for cause, thereby restricting the President’s executive power, and the CFPB was funded by the Federal Reserve System as opposed to the regular congressional appropriations, rendered it unconstitutional under Articles I, II, and III of the Constitution. The Court found none of the company’s arguments persuasive and denied the motion to dismiss.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

Written by:

Published In:

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.

© Goodwin Procter LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.