CFPB Week in Review

by Stinson Leonard Street - Dodd-Frank and the Jobs Act
Contact

The Consumer Financial Protection Bureau (CFPB) had another busy week.  Here is an overview of what the CFPB was up to recently:

Enforcement Actions and Litigation

Enforcement Action Against Santander Bank

On July 14, 2016, the CFPB announced an administrative consent order against Santander Bank, N.A., to resolve alleged illegal overdraft service practices.

In 2010, new federal rules took effect that prohibited banks and credit unions from charging overdraft fees on ATM and one-time debit card transactions unless the consumers affirmatively opted in for that service.  If consumers did not opt in then the banks and credit unions could decline the transaction due to insufficient funds, but the consumers in those situations would not be charged an overdraft fee.

The CFPB alleged that from 2010 to 2014, Santander marketed and enrolled consumers in its “Account Protector” overdraft service for ATM and one-time debit transactions, and charged those consumers $35 per overdraft, without the consumers’ consent.  Specifically, the CFPB found that Santander’s illegal and improper practices included:

  • Signing consumers up for overdraft service without their consent;
  • Deceiving consumers into believing that the overdraft service was free;
  • Deceiving consumers about the fees they would face if they did not opt in;
  • Falsely claiming the call was not a sales pitch; and
  • Failing to stop its telemarketer’s deceptive tactics.

Pursuant to the consent order, Santander must:

  • Contact all consumers associated with Santander’s telemarketing program and verify that each consumer wants to “opt-in”;
  • Not use a vendor to conduct outbound telemarketing of overdraft services to consumers;
  • Increase oversight of all third-party telemarketers, including developing and implementing new or revised policies governing those relationships; and
  • Pay a $10 million penalty to the CFPB’s Civil Penalty Fund.

Settlement with World Law Group

On July 19, 2016, the CFPB and three individuals related to World Law Group reached a stipulated $107 million settlement, concerning allegations that the defendants charged consumers advanced fees for debt relief services.  The $107 million settlement is with three individuals, which payment will be suspended if those individuals turn over frozen assets in their personal bank accounts, commercial property, and approximately a dozen vehicles.  The agreement also prohibits the defendants from telemarketing or assisting others in telemarketing any consumer financial product or service, and they cannot sell, advertise, or own debt relief products.

The case is CFPB v. Orion Processing LLC, et al., No. 1:15-cv-23070, in the U.S. District Court in the Southern District of Florida.

Summary Judgment Win Against Mortgage Legal Group LLP

On July 20, 2016, a Wisconsin federal judge partially granted the CFPB’s motion for summary judgment against Mortgage Legal Group LLP.  The CFPB alleged that Mortgage Legal Group LLP scammed struggling homeowners in connection with foreclosure proceedings, including misrepresenting their services and collecting advance fees for their services.  The judge’s ruling found that the retainer fee charged by Mortgage Legal Group LLP amounted to advance fees and the amount of restitution and disgorgement the entity should face should be decided by net revenues the entity received, which amounted to approximately $18.3 million.  The parties have until August 2, 2016, to propose to the court possible trial dates for the remaining legal issues.

Amicus Brief in Spokeo Case

On July 13, 2016, the CFPB filed an amicus brief in Robins v. Spokeo, Inc., which is pending in the U.S. Court of Appeals for the Ninth Circuit.  The issue in the case is essentially one of standing to bring a claim in federal court and whether a litigant has shown that they suffered “real” and “concrete” harm as a result of the defendant’s alleged actions.  Specifically, the issue relates to the plaintiff’s claim that the defendant’s website operator willfully violated the Fair Credit Reporting Act (“FCRA”) by publishing inaccurate personal information about plaintiff at a time when he was seeking employment.  The Ninth Circuit originally held that it was constitutional for Congress to treat FCRA violations as “concrete, de facto injuries” that satisfy, without more, the injury in fact requirement for Article III standing.  In May, the U.S. Supreme Court issued an opinion holding that the Ninth Circuit’s analysis was incomplete, because although the Ninth Circuit had addressed the particularization of plaintiff’s alleged injuries to establish injury in fact, it failed to address the concreteness of the alleged injury.  Thus, the U.S. Supreme Court vacated the Ninth Circuit’s judgment and remanded the case for the Ninth Circuit to consider whether “the particular procedural violations alleged in this case entail a degree of risk sufficient to meet the concreteness requirement” for Article III standing.

The CFPB’s amicus brief in support of the plaintiff, which addresses the issue remanded by the U.S. Supreme Court.  In general, the CFPB’s brief argues that Congress’s decision to grant consumers a right of action for the dissemination of a false consumer report if it resulted from a consumer reporting agency’s willful failure to following reasonable procedures demonstrates Congress’s belief that such dissemination of inaccurate information presents an unacceptable risk of harm to consumers.  As such, the CFPB’s brief urges the Ninth Circuit to find that the plaintiff has met the requirements for Article III standing.

Announcements

On July 20, 2016, CFPB Director Richard Cordray participated in a press call related to student loan servicing (transcript here).  Cordray’s discussion centered on efforts the CFPB is taking and plans to take related to regulating the student loan servicing industry.  The CFPB has made clear in the past that student loan servicing is a top priority for the bureau.  Among other things, Cordray emphasized that student loan borrowers should be able to expect high-quality service and clear, consistent, and personalized information about repayment plans.  Further, Cordray mentioned The Joint Statement of Principles on Student Loan Servicing that the bureau released to help provide the framework for servicing reform.  According to Cordray, “[w]hen implemented, these servicing standards will bring us closer to more consistency, transparency, actionability, and accountability in this important marketplace.”  The takeaway from this discussion is that the CFPB continues to look at ways to regulate the student loan servicing industry and it will likely continue to take steps to do just that in the near term.

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.

© Stinson Leonard Street - Dodd-Frank and the Jobs Act | Attorney Advertising

Written by:

Stinson Leonard Street - Dodd-Frank and the Jobs Act
Contact
more
less

Stinson Leonard Street - Dodd-Frank and the Jobs Act on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*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. Or, sign up using your email address.