From Collector: A Full Plate

What will the CFPB be up to in 2020? A lot! Dig into five issues that could impact your business.

1/14/2020 11:30 AM

NewsCollector Magazine
From Collector: A Full Plate

The Consumer Financial Protection Bureau has had a lot on its plate since the day it opened for business in July 2011. Tasked with protecting U.S. consumers’ finances through education and enforcement, the bureau’s last eight years have been a regulatory rollercoaster ride—in addition to its mandated work, it has cycled through three directors (four if you count Leandra English, who eventually dropped her legal fight for the position), weathered a temporary name change, reversed course on some policies and repeatedly delayed issuing its proposed rules for the debt collection industry (finally released this year, in case you hadn’t heard).

Now the bureau seems to be tackling more than ever; its full plate has grown into a veritable buffet table, Collector magazine Managing Editor Anne Rosso May reports in the January issue. Expect the CFPB, and consumer protection in general, to be a hot topic of conversation for both Democrats and Republicans in this election year.

Here are some CFPB issues the accounts receivable management (ARM) industry will be watching closely in 2020.

Leadership Structure Questions

In October 2019, the U.S. Supreme Court announced it would take on Seila Law v. Consumer Financial Protection Bureau, a case that challenges the constitutionality of the CFPB’s leadership structure. An important note: This case is not, as many believe, about whether the bureau itself is unconstitutional, rather it’s an examination of whether the provision of the law allowing the president to remove the agency’s director only “for cause” violates the constitutional separation of powers.

“The Supreme Court, in granting Cert, directed the parties to address the question whether the provision at issue can be severed from the Dodd-Frank Act, in the event that the provision is found unconstitutional,” said Anthony DiResta, partner with Holland & Knight. “My prediction is that the majority of the court will find the provision problematic, as it gives the CFPB director broad power over the financial services industry that resides in one individual and that is not found in deliberative bodies like the FTC, which operates as a commission.”

Tune in to the ACA Cast episode: “Legal Review: Understanding the Challenge to the Constitutionality of CFPB’s Leadership Structure” for more insights on this potentially game-changing case.

Defining “Abusive” Under Dodd-Frank

Many ARM industry participants want more guidance from the bureau on the definition of “abusive” acts under the Dodd-Frank Act, potentially through a new policy or rulemaking. Unfair, deceptive, or abusive acts or practices (UDAAPs) are a regulatory focal point, especially when it comes to CFPB enforcement actions.

“Deception and unfairness have a long history of case law and guidance, but there is no clear guidance on the four types of abusive practices,” said ACA member Lucy Morris, partner at Hudson Cook LLP. “The bureau has different tools to declare an unfairness standard abusive, but it primarily uses its enforcement authority to do so.”

Based on what ACA has seen over the last few years, an act may be abusive under the Dodd-Frank Act when it interferes with the consumer’s ability to understand a term or a condition or takes advantage of the consumer’s lack of understanding.

For instance, creating an artificial sense of urgency to induce borrowers to make a payment or charging fees in excess of what’s allowed by law might be abusive acts.

Enforcement Trends

In the CFPB’s relatively short life span, we’ve seen it work though several personality shifts. There was Cordray’s aggressive focus on regulation by enforcement and then former acting director Mick Mulvaney’s decision to put his foot on the brakes. While Kraninger may have initially pulled back a bit on enforcement actions while she figured out which direction to take the bureau, make no mistake: right now the CFPB is squarely focused on consumer protection.

“Investigations are going on, lawsuits are being brought, rulemaking is taking place, and audits and exams are taking place,” DiResta said. “It’s operating as an agency that all companies in the financial services industry need to pay attention to. I’m finding from my personal experience in defending companies and individuals in investigations and exams that [the bureau is] as aggressive as they were under Cordray. So, if there is an attitude out there, at least in our industry, that we can sit back and relax because Trump in the White House, that’s a huge mistake.”

In fiscal year 2019, the CFPB announced 22 public enforcement actions and settled six previously filed lawsuits, a marked increase from the prior year. The actions cover several ARM markets, including debt collection, credit reporting and student loan servicing.

By all accounts, the bureau’s current enforcement pace seems likely to continue in 2020, though Sarah J. Auchterlonie, shareholder with Brownstein Hyatt Farber Schreck LLP, believes under Kraninger’s watch the CFPB will be a bit more careful and measured about advancing “creative theories of liability,” and will instead stick to the more strict construction of statutes and regulations.

Read more insights on issues on the CFPB’s radar this year, including developing the final debt collection rule and the role of the presidential election, in the January issue of Collector magazine.

Subscriptions to the Collector magazine digital edition and email notifications for each new issue are available for ACA International members by logging in to ACA International’s website here. Members and nonmembers can also purchase a print subscription. Nonmembers can create a guest profile on ACA’s website to subscribe to available publications.


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

From Collector: A Full Plate

The Consumer Financial Protection Bureau has had a lot on its plate since the day it opened for business in July 2011. Tasked with protecting U.S. consumers’ finances through education and enforcement, the bureau’s last eight years have been a regulatory rollercoaster ride—in addition to its mandated work, it has cycled through three directors (four if you count Leandra English, who eventually dropped her legal fight for the position), weathered a temporary name change, reversed course on some policies and repeatedly delayed issuing its proposed rules for the debt collection industry (finally released this year, in case you hadn’t heard).

Now the bureau seems to be tackling more than ever; its full plate has grown into a veritable buffet table, Collector magazine Managing Editor Anne Rosso May reports in the January issue. Expect the CFPB, and consumer protection in general, to be a hot topic of conversation for both Democrats and Republicans in this election year.

Here are some CFPB issues the accounts receivable management (ARM) industry will be watching closely in 2020.

Leadership Structure Questions

In October 2019, the U.S. Supreme Court announced it would take on Seila Law v. Consumer Financial Protection Bureau, a case that challenges the constitutionality of the CFPB’s leadership structure. An important note: This case is not, as many believe, about whether the bureau itself is unconstitutional, rather it’s an examination of whether the provision of the law allowing the president to remove the agency’s director only “for cause” violates the constitutional separation of powers.

“The Supreme Court, in granting Cert, directed the parties to address the question whether the provision at issue can be severed from the Dodd-Frank Act, in the event that the provision is found unconstitutional,” said Anthony DiResta, partner with Holland & Knight. “My prediction is that the majority of the court will find the provision problematic, as it gives the CFPB director broad power over the financial services industry that resides in one individual and that is not found in deliberative bodies like the FTC, which operates as a commission.”

Tune in to the ACA Cast episode: “Legal Review: Understanding the Challenge to the Constitutionality of CFPB’s Leadership Structure” for more insights on this potentially game-changing case.

Defining “Abusive” Under Dodd-Frank

Many ARM industry participants want more guidance from the bureau on the definition of “abusive” acts under the Dodd-Frank Act, potentially through a new policy or rulemaking. Unfair, deceptive, or abusive acts or practices (UDAAPs) are a regulatory focal point, especially when it comes to CFPB enforcement actions.

“Deception and unfairness have a long history of case law and guidance, but there is no clear guidance on the four types of abusive practices,” said ACA member Lucy Morris, partner at Hudson Cook LLP. “The bureau has different tools to declare an unfairness standard abusive, but it primarily uses its enforcement authority to do so.”

Based on what ACA has seen over the last few years, an act may be abusive under the Dodd-Frank Act when it interferes with the consumer’s ability to understand a term or a condition or takes advantage of the consumer’s lack of understanding.

For instance, creating an artificial sense of urgency to induce borrowers to make a payment or charging fees in excess of what’s allowed by law might be abusive acts.

Enforcement Trends

In the CFPB’s relatively short life span, we’ve seen it work though several personality shifts. There was Cordray’s aggressive focus on regulation by enforcement and then former acting director Mick Mulvaney’s decision to put his foot on the brakes. While Kraninger may have initially pulled back a bit on enforcement actions while she figured out which direction to take the bureau, make no mistake: right now the CFPB is squarely focused on consumer protection.

“Investigations are going on, lawsuits are being brought, rulemaking is taking place, and audits and exams are taking place,” DiResta said. “It’s operating as an agency that all companies in the financial services industry need to pay attention to. I’m finding from my personal experience in defending companies and individuals in investigations and exams that [the bureau is] as aggressive as they were under Cordray. So, if there is an attitude out there, at least in our industry, that we can sit back and relax because Trump in the White House, that’s a huge mistake.”

In fiscal year 2019, the CFPB announced 22 public enforcement actions and settled six previously filed lawsuits, a marked increase from the prior year. The actions cover several ARM markets, including debt collection, credit reporting and student loan servicing.

By all accounts, the bureau’s current enforcement pace seems likely to continue in 2020, though Sarah J. Auchterlonie, shareholder with Brownstein Hyatt Farber Schreck LLP, believes under Kraninger’s watch the CFPB will be a bit more careful and measured about advancing “creative theories of liability,” and will instead stick to the more strict construction of statutes and regulations.

Read more insights on issues on the CFPB’s radar this year, including developing the final debt collection rule and the role of the presidential election, in the January issue of Collector magazine.

Subscriptions to the Collector magazine digital edition and email notifications for each new issue are available for ACA International members by logging in to ACA International’s website here. Members and nonmembers can also purchase a print subscription. Nonmembers can create a guest profile on ACA’s website to subscribe to available publications.


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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