CFPB Director: Revised Policy on Consent Orders Coming Soon

The policy will focus on consistency and effectiveness of consent order timelines.

12/13/2019 8:00 AM

CFPBNewsAdvocacy
CFPB Director: Revised Policy on Consent Orders Coming Soon

The Consumer Financial Protection Bureau is developing an updated consent order process designed to provide stakeholders with a more consistent policy that would ensure consent orders remain in effect only as long as necessary.

ACA International is pleased that the bureau is poised to revise this burdensome and costly policy as many members and stakeholders have long raised concerns about the process. Many parties contributing to ACA’s comments on CID requirements in April 2018 also classified the bureau’s past CID process as “regulation by enforcement.”

In recent weeks, Director Kathy Kraninger addressed the issue in a speech noting, “I want to make sure that everyone knows what the rules are and when they are in violation of, or compliance with our rules. This is really important for our examiners as they work to ensure that entities are in compliance.”

According to the CFPB, the new CID policy also considers recent court decisions about notifications of purpose in addition to comments received during the Request for Information process. It is also consistent with a 2017 report by the bureau’s Office of Inspector General that emphasized the importance of updating Office of Enforcement policies to reflect such developments.

The Consumer Financial Protection Act of 2010 authorizes the bureau to issue investigational subpoenas known as CIDs when looking into potential violations of law. The act provides that each CID “shall state the nature of the conduct constituting the alleged violation which is under investigation and the provision of law applicable to such violation.” CIDs issued by the bureau set out this information in a section known as the “notification of purpose.”

“ACA is pleased that the bureau is reviewing this important issue for the accounts receivable management industry, we are hopeful they have taken our concerns into consideration and are looking forward to reviewing the revised policy and updating members about it,” said Leah Dempsey, vice president and senior counsel of federal advocacy.

As the industry awaits news on the proposed debt collection rulemaking, Kraninger also provided an update on the CFPB’s authority to “protect consumers from unfair, deceptive, or abusive acts or practices (UDAAP)” under the Dodd-Frank Act.

The authority was the subject of one of the bureau’s first symposium series designed to assist in the policy development, and possible future rulemakings, process under Kraninger’s leadership.

“Although Congress provided some indication of its meaning through a definition in the Dodd-Frank Act, abusiveness does not have the long and rich history of unfairness or deception. Substantial concerns have been raised about the uncertain and indeterminate meaning of certain terms Congress enacted in the definition,” Kraninger said.

Uncertainty about UDAAPs is not beneficial, she explained.

“Businesses that want to comply with the law face great challenges in doing so and these challenges can impose large costs, including impeding innovation,” she said. “And consumers ultimately may lose the benefits of improved products and lower prices if lack of clarity imposes such costs.”

ACA has also sought more clarity on this issue. In the comments filed in response to the CID process it argued, “Concerns are widespread about the bureau’s practice of characterizing conduct as an unfair, deceptive, or abusive act or practice (“UDAAP”) without prior notice, and then holding other businesses accountable under this retroactive interpretation of legally required or proscribed behavior. Moreover, it remains unclear how the Bureau defines UDAAP, with the ‘unfair’ prong continuing to be a particularly subjective matter for individual enforcement attorneys and examiners.”

Following the June symposium, which was attended by ACA staff and members, the CFPB announced it would continue to review options to further define the meaning of abusiveness under the Dodd-Frank Act to protect consumers and provide clarity for business stakeholders in complying with the law, ACA previously reported.

“We have a responsibility to provide greater clarity on how the bureau plans to implement and apply this standard,” Kraninger said. “At the same time, we have to allow for the environment to build the common law around abusiveness. We are looking to do both with a concrete step in the near future.”

The bureau’s next symposium in February 2020 will focus on consumer authorized financial data sharing. 

Read Kraninger’s complete remarks here.

Related Content from ACA International:

CFPB Reviews Defining Abusive Acts or Practices Under the Dodd-Frank Act

CFPB Announces Civil Investigative Demand Policy Change Reflecting ACA International’s Comments on Reform


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

CFPB Director: Revised Policy on Consent Orders Coming Soon

The Consumer Financial Protection Bureau is developing an updated consent order process designed to provide stakeholders with a more consistent policy that would ensure consent orders remain in effect only as long as necessary.

ACA International is pleased that the bureau is poised to revise this burdensome and costly policy as many members and stakeholders have long raised concerns about the process. Many parties contributing to ACA’s comments on CID requirements in April 2018 also classified the bureau’s past CID process as “regulation by enforcement.”

In recent weeks, Director Kathy Kraninger addressed the issue in a speech noting, “I want to make sure that everyone knows what the rules are and when they are in violation of, or compliance with our rules. This is really important for our examiners as they work to ensure that entities are in compliance.”

According to the CFPB, the new CID policy also considers recent court decisions about notifications of purpose in addition to comments received during the Request for Information process. It is also consistent with a 2017 report by the bureau’s Office of Inspector General that emphasized the importance of updating Office of Enforcement policies to reflect such developments.

The Consumer Financial Protection Act of 2010 authorizes the bureau to issue investigational subpoenas known as CIDs when looking into potential violations of law. The act provides that each CID “shall state the nature of the conduct constituting the alleged violation which is under investigation and the provision of law applicable to such violation.” CIDs issued by the bureau set out this information in a section known as the “notification of purpose.”

“ACA is pleased that the bureau is reviewing this important issue for the accounts receivable management industry, we are hopeful they have taken our concerns into consideration and are looking forward to reviewing the revised policy and updating members about it,” said Leah Dempsey, vice president and senior counsel of federal advocacy.

As the industry awaits news on the proposed debt collection rulemaking, Kraninger also provided an update on the CFPB’s authority to “protect consumers from unfair, deceptive, or abusive acts or practices (UDAAP)” under the Dodd-Frank Act.

The authority was the subject of one of the bureau’s first symposium series designed to assist in the policy development, and possible future rulemakings, process under Kraninger’s leadership.

“Although Congress provided some indication of its meaning through a definition in the Dodd-Frank Act, abusiveness does not have the long and rich history of unfairness or deception. Substantial concerns have been raised about the uncertain and indeterminate meaning of certain terms Congress enacted in the definition,” Kraninger said.

Uncertainty about UDAAPs is not beneficial, she explained.

“Businesses that want to comply with the law face great challenges in doing so and these challenges can impose large costs, including impeding innovation,” she said. “And consumers ultimately may lose the benefits of improved products and lower prices if lack of clarity imposes such costs.”

ACA has also sought more clarity on this issue. In the comments filed in response to the CID process it argued, “Concerns are widespread about the bureau’s practice of characterizing conduct as an unfair, deceptive, or abusive act or practice (“UDAAP”) without prior notice, and then holding other businesses accountable under this retroactive interpretation of legally required or proscribed behavior. Moreover, it remains unclear how the Bureau defines UDAAP, with the ‘unfair’ prong continuing to be a particularly subjective matter for individual enforcement attorneys and examiners.”

Following the June symposium, which was attended by ACA staff and members, the CFPB announced it would continue to review options to further define the meaning of abusiveness under the Dodd-Frank Act to protect consumers and provide clarity for business stakeholders in complying with the law, ACA previously reported.

“We have a responsibility to provide greater clarity on how the bureau plans to implement and apply this standard,” Kraninger said. “At the same time, we have to allow for the environment to build the common law around abusiveness. We are looking to do both with a concrete step in the near future.”

The bureau’s next symposium in February 2020 will focus on consumer authorized financial data sharing. 

Read Kraninger’s complete remarks here.

Related Content from ACA International:

CFPB Reviews Defining Abusive Acts or Practices Under the Dodd-Frank Act

CFPB Announces Civil Investigative Demand Policy Change Reflecting ACA International’s Comments on Reform


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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