OIG issues report on CFPB civil penalty fund victim identification process

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The Office of Inspector General for the Fed and CFPB has issued a report on the results of its audit of the CFPB’s process for identifying victims eligible to receive compensation from the Consumer Financial Civil Penalty Fund (CPF).

Section 1017 of the Dodd-Frank Act requires the CFPB to deposit in the CPF the civil penalties it collects in enforcement actions. The funds are first to be used to compensate consumers who do not receive full compensation from the defendants who allegedly harmed them. If funds remain after the CFPB has provided full compensation to all eligible victims or if payments to victims are impracticable because victims cannot be located or it is otherwise impracticable to pay victims, the CFPB can use the funds for consumer education and financial literacy programs.

The report discusses the victim identification process and the roles of the CFPB’s Office of Enforcement, Office of the Chief Financial Officer (OCFO), and Office of Technology and Innovation (T&I). It also discusses the role of a third-party vendor whose responsibilities include identifying eligible victims and disbursing payments.

The OIG found that while the CPF victim identification process was generally effective and efficient, the OCFO had not documented the roles and responsibilities of T&I in the process. The OIG notes that the process “is data dependent and in some instances requires the involvement of T&I to produce preliminary lists of eligible victims.” Accordingly, the OIG suggested that the OCFO update its procedures to document T&I’s roles and responsibilities.

In July 2014, Government Accountability Office issued a report on the results of its review of the CPF. The review had been requested by a House member.

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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