CFPB Allowed to Enforce $38 Million Final Order While Appeal Is Pending

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A district court recently held that the CFPB could enforce a Final Order entered against an online lender and its CEO even while the appeal from the order is pending.

In 2015, the CFPB brought an enforcement action against the lender and its CEO (collectively, Respondents) related to their small dollar lending operation alleging violations under TILA, the CFPA, and the EFTA.  On January 11, 2021, the CFPB entered a Final Order, which required the Respondents to pay approximately $38 million in restitution, and the lender and the CEO to pay $7.5 million and $5 million in civil penalties, respectively.  Payment to the CFPB was due within 30 days.  However, if the Respondents appealed the decision to the U.S. Court of Appeals for the Tenth Circuit, they could pay the amounts owed to an escrow account within that timeframe instead.  The Respondents did not remit payment, and, instead, appealed the Final Order to the Tenth Circuit, but failed to seek its stay.  The CFPB filed a petition with the district court seeking to enforce the Final Order. 

After issuing a show cause order, to which only the CEO responded, and conducting a telephonic hearing, the district court granted the CFPB’s petition.  Under the CFPA, only federal courts of appeals can affirm, modify, terminate, or set aside an order by the CFPB.  Additionally, an appeal, by itself, does not stay an order, unless it is specifically authorized by the federal appellate court.  Conversely, district courts, upon petition, can only enforce an effective and outstanding order.  The district court denied the CEO’s request to exercise discretion to delay the resolution of the CFPB’s petition while the appeal was pending because such action would be tantamount to staying enforcement of or suspending the Final Order, in prohibition of the CFPA.  

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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