Will the CFPB really complete its arbitration study this year?


We recently learned that earlier this month, the CFPB sent letters to payday lenders demanding copies of certain of their standard loan agreements for use in connection with the CFPB’s arbitration study. The letters are accompanied by a CFPB order that orders the lenders to file the agreement with the CFPB. The order relies on the CFPB’s authority under Section 1022 of Dodd-Frank “to gather information from time to time regarding the organization, business conduct, markets, and activities of covered persons and service providers” by using various methods, including through the issuance of orders directing covered persons to provide such information.

I’m surprised that the CFPB would still be collecting this kind of basic information at this late stage. This past April, at the 19th Annual Consumer Financial Services Institute in Chicago (which I co-chaired), the CFPB attorney who is managing the study, Will Wade-Gery, indicated that the study will be completed by the end of this year. That timing now seems questionable in light of the letters sent this month.

The CFPB is conducting the study under Section 1028 of Dodd-Frank. In April 2012, it published a request for information about the scope, methodology and data sources for the study. In September 2013, the CFPB issued orders to obtain standard checking account agreements for the study. In December 2013, the CFPB published preliminary study results.

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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