CFPB Brings String of Enforcement Actions to Round Out 2023

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In December, the CFPB brought a series of three separate enforcement actions against several financial services companies alleging a range of violations of federal consumer protections laws.

On December 7, the CFPB issued a consent order against a regional bank headquartered in Virginia, finding that the bank had failed to comply with the Electronic Fund Transfer Act (EFTA) and engaged in deceptive acts and practices in violation of the Consumer Financial Protection Act (CFPA). Specifically, the CFPB found that the bank’s process for opening checking accounts in person failed to provide customers with adequate written notice regarding the bank’s overdraft services. The CFPB further found that the bank made misrepresentations and omitted material information to customers who called in by phone and enrolled in the bank’s overdraft services. The consent order requires the bank to cease the allegedly unlawful conduct, pay no less than $5 million in redress to affected consumers, and pay a penalty of $1.2 million.

On December 15, the CFPB issued a consent order against a Pennsylvania-based third-party debt collection company engaged in the business of collecting medical debts and furnishing consumer data to consumer reporting agencies (CRAs). The CFPB found that the company violated the Fair Credit Reporting Act (FCRA) by failing to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information it furnishes to CRAs, including failing to adequately conduct and disclose information related to direct dispute investigations. The CFPB also found that the company violated the Fair Debt Collection Practices Act (FDCPA) by sending debt collection letters to consumers before providing a verification of the debt when the company had received a written dispute from the consumer, misrepresenting that consumers owed debts when the company lacked a reasonable basis to do so, and communicating credit information to CRAs without disclosing that such information was in dispute. The consent order permanently bans the company from engaging in the debt collection activities and requires the company to pay a $95,000 penalty.

Finally, on December 20, the CFPB and DOJ filed a joint complaint against two land development companies, an affiliated mortgage company, and a loan origination company, alleging that the defendants engaged in a variety of unlawful conduct in violation federal consumer protection laws, including that: (1) the defendants unlawfully targeted consumers of Hispanic origin with a predatory loan product in violation of the Equal Credit Opportunity Act (ECOA); (2) certain of the defendants made deceptive representations to consumers in violation of the CFPA; (3) certain of the defendants made untrue statements, omitted material facts, failed to provide required accurate translations, and failed to report and disclose required information in violation of the Interstate Land Sales Full Disclosure Act (ILSFDA). In addition, the DOJ alleges that the defendants’ conduct violated the Fair Housing Act (FHA). The complaint seeks injunctive relief to prevent future violations, redress to consumers, damages, and the imposition of civil money penalties.

Putting it into Practice: These latest three enforcement actions rounded out a busy year for the CFPB. In 2023, the CFPB filed a total of 29 different enforcement actions, which was up from a total of 20 in 2022 and only 18 in 2021 (see CFPB’s “Enforcement by the Numbers” page, available here). Given this steady uptick in the CFPB’s enforcement activity, companies engaged in the provision financial services to consumers should prepare for heightened agency scrutiny to continue in the new year.

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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