Novel Reading Of Statute Widens CFPB Jurisdiction

Morrison & Foerster LLP
Contact

Tucked away in a seemingly innocuous paragraph in a complaint, the Consumer Financial Protection Bureau has asserted an extraordinary and potentially far-reaching expansion of its authority.

On June 6, 2016, the CFPB filed an action in a U.S. district court asserting that Intercept Corp. (and each of its owners) engaged in unfair acts and practices in violation of the Consumer Financial Protection Act. Intercept initiates Automated Clearing House (ACH) transactions to consumer accounts on behalf of its merchant-customers. In doing so, Intercept acts as an agent of the merchant-customer, but not as an agent to the consumer whose account is being debited. Nevertheless, the CFPB complaint states that Intercept is a “covered person” under the CFPA because it provides “payments or other financial data processing products or services to consumers[.]” The complaint also states that Intercept processes transactions resulting in the transfer of funds, via the ACH system, from the deposit accounts of consumers to pay for loans and other transactions.

Originally published in Law360, New York on June 27, 2016.

Please see full Article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

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.

© Morrison & Foerster LLP | Attorney Advertising

Written by:

Morrison & Foerster LLP
Contact
more
less

Morrison & Foerster LLP on:

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:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.