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  • Trump to Select Mulvaney as Interim CFPB Director

    Federal Issues

    According to media sources, President Trump is expected to select Mick Mulvaney, the current Director of the White House Office of Management and Budget (OMB), to serve as the interim Director of the CFPB upon Richard Cordray’s resignation at the end of this month. Mulvaney would keep his current position and serve as both the Director of OMB and Acting Director of the CFPB throughout the interim term.

    Federal Issues CFPB OMB Trump

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  • CFPB Initiates Complaint Against Company for Deceptive, Unfair, and Abusive Loan Collection Practices

    Consumer Finance

    On November 15, the CFPB announced it had filed a complaint against a Texas-based service provider, alleging that it had assisted in the collection of loans that were, in whole or in part, void under state law. The complaint filed in the U.S. District Court for the District of Montana alleges that the service provider, which provided services to three tribal lending entities engaged in the business of extending online installment loans and lines of credit, along with two companies responsible for the collection process (collectively defendants), assisted in the collection of loans that consumers were not legally obligated to pay based on identified states’ usury laws or licensing requirements. Although the specific claims vary by defendant, the complaint alleges that the defendants engaged in deceptive, unfair, and abusive acts and practices in violation of the Consumer Financial Protection Act (CFPA) by:

    • misrepresenting that consumers were responsible for money owed on loans that were void in whole or in part, or did not exist, because the loans were void under state licensing or usury laws (voided loans);
    • demanding repayment from consumers on voided loans by issuing “demand letters,” electronically debiting funds from consumer bank accounts, and placing phone calls to consumers;
    • failing to disclose to consumers that defendants had no legal right to collect on certain voided loans and that consumers were not legally obligated to repay the loans;
    • causing injury to consumers by servicing and collecting on the voided loans;
    • taking advantage of consumers’ “lack of understanding” regarding the voided loans; and
    • providing assistance in, or administering, the origination and collection of the voided loans.

    The CFPB is seeking monetary relief, civil money penalties, injunctive relief, and a prohibition of the service provider’s ability to commit future violations of the CFPA.

    Consumer Finance CFPB Debt Collection Installment Loans UDAAP CFPA

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  • CFPB Requests Comments on Overdraft Disclosures; CFPB Announces Final Language Access Plan; Holds Ceiling at $12.00 for Allowable FCRA Charges

    Agency Rule-Making & Guidance

    On November 15, the CFPB published a request for comment on a proposal to the Office of Management and Budget (OMB) to conduct online testing of point of sale/ATM (POS/ATM) overdraft disclosure forms. In the request, the Bureau invited comments on, (i) “[w]hether the collection of information is necessary for the proper performance of the functions of the Bureau, including whether the information will have practical utility”; (ii) “[t]he accuracy of the Bureau’s estimate of the burden of the collection of information, including the validity of the methods and the assumptions used”; (iii) “[w]ays to enhance the quality, utility, and clarity of the information to be collected”; and (iv) “[w]ays to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.” Comments must be received by January 16, 2018.

    On November 16, the CFPB released the final version of its Language Access Plan (Plan) to provide non-English speaking persons access to its programs and services. The Plan highlights two key language access functions of the Bureau: offering translated consumer-facing brochures and handling complaints from consumers in multiple languages. The Bureau originally proposed the Plan in 2014 (covered previously by InfoBytes). The final Plan is current as of November 13, 2017.

    CFPB also announced on November 16 that the maximum allowable charges for certain disclosures under the Fair Credit Reporting Act (FCRA) will remain at the current level. Each year the original amount referenced in the FCRA must be readjusted (and rounded to the nearest fifty cents) based on the annual percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U). The amount for 2018, based on the annual percentage increase in the CPI-U, remains unchanged at $12.00.

    Agency Rule-Making & Guidance FCRA CFPB Consumer Finance Federal Register Consumer Education

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  • CFPB Urges Supreme Court to Reject Tribal Lenders' Petition

    Courts

    On November 9, the CFPB filed a brief with the Supreme Court opposing the petition for a writ of certiorari submitted by online tribal lending entities.  The lenders are challenging a January decision by the Ninth Circuit Court of Appeals, which ordered the entities to comply with a CFPB investigation (previously covered by Infobytes). The litigation stems from the issuance of a civil investigative demand (CID) by the CFPB to online lending entities owned by Native American tribes. The entities argue that due to tribal sovereignty, the CFPB does not have jurisdiction over the small-dollar lending services in question. The district court and the Ninth Circuit concluded that the Consumer Financial Protection Act (CFPA) did not expressly exclude tribes from the CFPB’s enforcement authority and therefore, the entities cannot claim tribal sovereign immunity.

    In its brief opposing the certiorari petition, the CFPB argues that the Ninth Circuit’s holding does not conflict with any prior Supreme Court or court of appeals decision, making further review unwarranted. The CFPB also argues, among other things, that Supreme Court review is unnecessary because “[t]he question at this juncture is solely whether the Bureau may obtain information from petitioners pursuant to a CID,” not “whether petitioners are subject to the Bureau’s regulatory authority.” 

    Courts CFPB Payday Lending Consumer Lending U.S. Supreme Court Appellate Ninth Circuit

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  • CFPB Publishes Two RFIs Concerning Free Access to Credit Scores

    Consumer Finance

    On November 13, the CFPB’s Office of Financial Education (OFE) published two requests for information (RFI) in the Federal Register concerning free access to credit scores. The first RFI requests information related to (i) consumers’ experience when accessing free credit scores, and (ii) the experience of companies and nonprofits when offering free access to credit scores to their customers and the general public. The Bureau plans to use the information gathered through the RFI to, among other things, “identify educational content that is providing the most value to consumers, and additional educational content that the Bureau or others could develop to increase consumers’ understanding of credit scores and credit reports.” Comments must be received by February 12, 2018.

    The second RFI requests information on companies that provide existing customers free access to a credit score.  This information will be used to update OFE’s March 2017 list of companies that offer this service. (See previous InfoBytes coverage here.) Following its update to the list, the CFPB intends to publish information “to educate consumers about the availability of credit scores and credit reports and how this information can be used effectively.” Comments must be received by January 12, 2018.

    Consumer Finance CFPB Credit Scores Federal Register

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  • Agencies Announce Changes to Threshold Amounts for Truth in Lending Act and Consumer Leasing Act

    Agency Rule-Making & Guidance

    On November 8, the CFPB and the Federal Reserve Board (Board) finalized the annual dollar threshold adjustments that govern the application of Regulation Z (Truth in Lending Act) and Regulation M (Consumer Leasing Act) to credit transactions as required by the Dodd-Frank Act. Each year the thresholds must be readjusted based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The exemption threshold for 2018, based on the annual percentage increase in the CPI-W, is now $55,800 or less, except for private student loans and loans secured by real property, which are subject to TILA regardless of the amount.

    Additionally, on November 8, the OCC, along with the CFPB and the Board, finalized amendments to the official interpretations for the regulations implementing section 129H of TILA, which determines the threshold amount for a small loan’s exemption from the special appraisal requirements that apply to higher-priced mortgage loans. The threshold for 2018, based on the annual percentage increase in the CPI-W, is now $26,000.         

    Agency Rule-Making & Guidance CFPB Federal Reserve OCC TILA CLA

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  • CFPB Takes Action Against Largest Debt Settlement Provider

    Consumer Finance

    On November 9, the CFPB announced the filing of a complaint against the largest debt settlement provider in the country and its co-CEO for allegedly deceiving consumers about its debt settlement services. According to the complaint, the defendants engaged in deceptive acts and practices in violation of the Telemarketing Sales Rule and the Consumer Financial Protection Act by:

    • misleading consumers about the settlement provider’s ability to negotiate with creditors that the settlement provider knew maintained policies against working with settlement companies;
    • instructing consumers to mislead creditors when asked about their participation in a debt settlement program;
    • leading consumers to believe the defendants would negotiate on their behalf when, in fact, some consumers were only “coached” on how to negotiate settlements on their own;
    • misleading consumers by charging them the full fee when creditors stop collection efforts without the defendants taking any action despite advertising that the fee is only charged if settlement is negotiated by the settlement provider and payments begin under the terms of a settlement; and
    • failing to clearly and conspicuously disclose consumers’ rights to refunds from their deposit accounts if they leave the settlement program.

    The CFPB is seeking monetary relief, civil money penalties, and injunctive relief against the defendants.

    Consumer Finance CFPB Debt Collection Enforcement Debt Settlement Telemarketing Sales Rule CFPA

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  • Cordray Speaks at Consumer Advisory Board Meeting

    Consumer Finance

    On November 2, CFPB Director Richard Cordray delivered prepared remarks at the Consumer Advisory Board (CAB) Meeting in Tampa, Florida addressing, among other things, the new rule (Rule) covering payday loans and certain other installment products (previously covered by a Buckley Sandler Special Alert). Cordray indicated that the Rule is intended to reform a market where many borrowers end up rolling over their loans multiple times, incur fees, and have trouble ultimately paying off their original balance. Cordray encouraged the CAB to discuss the Rule, noting the Bureau previously received over 1.4 million public comments on the proposal. Cordray also touched on topics regarding (i) financial security of older consumers, including reverse mortgages; (ii) complexities with delivering products to consumers with limited English proficiency ; and (iii) the Bureau’s September report, “Financial Well-Being in America,” which discussed the results of a nationwide survey measuring individual financial well-being.

    Consumer Finance CFPB Payday Lending Reverse Mortgages

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  • CFPB Reports Increase in Longer-Term Auto Loans

    Consumer Finance

    On November 1, the CFPB released a report finding an increase in the number of auto loans with terms of six years or longer. Specifically, the report notes that these longer-term loans made up 42 percent of auto loans originated in 2017, an increase from 26 percent of auto loans originated in 2009. The report observes that, while longer-term loans may make monthly payments more affordable, it is not clear that consumers are “better off” or more likely to repay such loans because of the increased financing costs and larger amounts financed.

    The report is a product of the CFPB’s Consumer Credit Trends tool (previously covered by InfoBytes) – a web-based resource that collects data on the auto finance, credit card, mortgage, and student loan markets. The tool’s data is drawn from a “nationally representative sample of credit records” kept by one of the top three U.S. credit reporting companies.

    Consumer Finance CFPB Auto Finance

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  • Trump Signs Legislation to End Arbitration Rule

    Agency Rule-Making & Guidance

    On November 1, President Trump signed a resolution repealing the CFPB’s embattled arbitration rule (Rule). The resolution, which passed the Senate two weeks ago, was issued under the Congressional Review Act (previously covered by InfoBytes here). Trump’s signature came two days after Richard Cordray, the Director of the CFPB, wrote to the President requesting he veto the resolution. In his letter, Cordray sought to appeal to the President’s business experience in an attempt to explain the necessity of going to court when “treated unfairly.” With Trump’s signing of the resolution, the Rule is now unenforceable. The Rule has previously come under scrutiny from federal regulators (see previous InfoBytes coverage here and here), as well as from industry trade groups (see previous InfoBytes coverage here). After the President’s signing, Keith A. Noreika, Acting Comptroller of the OCC, praised Congress and the President for vacating the rule, touting it as a “victory for consumers” because upholding the Rule would have “significantly increased the cost of credit.”

    Agency Rule-Making & Guidance Consumer Finance CFPB Arbitration CRA OCC

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