Archives: CFPB Updates

Subscribe to CFPB Updates RSS Feed

Final Payday Lending Rule Released by the CFPB

On Thursday October 5, the Consumer Financial Protection Bureau (CFPB) issued a long-awaited final rule governing certain short-term loans and longer term loans involving balloon payments, better known as the payday lending rule. The rule is expected to dramatically impact the short-term loan industry, imposing numerous new restrictions on both short-term lenders (including “payday” lenders … Continue Reading

Alternative Data and Credit Scores: Will it Trigger CFPB Enforcement?

The Consumer Financial Protection Bureau (“CFPB” or “Bureau”) recently announced an effort to better understand how “alternative data” could be used to expand access to credit. Through a formal notice and request for information just published, the CFPB is trying to learn more about the potential to use of what it calls “non-traditional” or “alternative” … Continue Reading

Bob Jaworski to Speak at BankHorizons Conference

On December 2nd, please join Robert Jaworski, a partner in Reed Smith’s Financial Services Regulatory Group who will be speaking at the BankHorizons 2016 conference. Bob’s presentation will discuss: For banks that rely heavily on consumer business, compliance with the ever-increasing volume of regulations coming out of Washington over the last several years has imposed … Continue Reading

Mortgage Lenders Receive Wake Up Call from CFPB

Last week, the CFPB issued a warning letter to 44 mortgage lenders and brokers concerning possible violations related to their collection and reporting of mortgage data under the Home Mortgage Disclosure Act (HMDA) and Regulation C. HMDA requires mortgage lenders to collect and report data related to certain housing-related loans, in part to ensure those … Continue Reading

CFPB Takes Enforcement Action Against FinTech Lender

On September 27, 2016, the Consumer Financial Protection Bureau (CFPB) entered into a Consent Order (the “Order”) with Flurish, Inc d/b/a LendUp (LendUp), a startup online lending company based in San Francisco that offers single-payment loans and installment loans in 24 states. The Order sends a powerful message to online lenders to make sure their … Continue Reading

CFPB Finally Adopts Amendments To Its Mortgage Servicing Rules

On August 4, the Bureau of Consumer Financial Protection (“CFPB”) finally adopted amendments (the “Amendments”) to its 2013 mortgage servicing rules (the “Servicing Rules”). The Servicing Rules implemented provisions in the Dodd-Frank Act to regulate in great detail the residential mortgage servicing business.  The Amendments have been under consideration by the CFPB for more than … Continue Reading

CFPB Moves Forward With Proposal To Ban Class Action Waivers In Arbitration

The Consumer Financial Protection Bureau has published its long anticipated 377-page proposed rule to bar banks and regulated financial institutions from including class action waivers in mandatory arbitration provisions in consumer contracts. Mandatory arbitration clauses, and class action waivers, are pervasive in financial contracts. According to a study by the CFPB in 2015 arbitration clauses … Continue Reading

CFPB Takes First Action Against Company for Lax Data Security Practices

The Consumer Financial Protection Bureau (“CFPB”) has announced its first data security enforcement action. On Wednesday (March 2), the CFPB released a consent order against Dwolla, an online payment platform company, alleging it failed to maintain adequate data security practices despite representations made on the company website and in communications with consumers that the company … Continue Reading

What Has the CFPB Said About That?

As an early “holiday gift,” to help you more easily search for a particular piece of guidance from the CFPB, we’ve put together two CFPB guidance documents for your review. The first is a compilation of all nine issues of the CFPB’s Supervisory Highlights, from 2012 to 2015. The second is a compilation of all … Continue Reading

CFPB Releases Compliance Bulletin about Obtaining Authorizations for Preauthorized Electronic Fund Transfers

The Consumer Financial Protection Bureau (the “CFPB”) warned financial companies in a compliance Bulletin Monday that they must have proper authorization before automatically debiting funds from customers’ accounts. (CFPB Compliance Bulletin 2015-06, November 23, 2015.) The Electronic Fund Transfer Act and its implementing rule, Regulation E, require that companies obtain consumer authorization for electronic fund … Continue Reading

FTC, CFPB, and States Collaborate to Clamp Down on Illegal Debt Collection

The Federal Trade Commission last week announced an unprecedented coordinated federal-state enforcement effort targeting deceptive and abusive debt collection. This sweeping initiative, termed “Operation Collection Protection,” coordinates federal, state, and local actions under the FTC, the CFPB, 47 state attorneys general, and other enforcement officers and agencies. As the top source of complaints to the … Continue Reading

CFPB Reports on Access to Mobile Financial Services

The Consumer Financial Protection Bureau (“CFPB”) this week shed new light on the growing mobile financial services sector, publishing a report compiling responses to its 2014 request for information on these services. The CFPB’s Office of Financial Empowerment issued a Request for Information (“RFI”) on June 11, 2014, regarding mobile financial services. The RFI’s stated … Continue Reading

Georgia Court Sheds Light on CFPB’s Power to Sue Companies that ‘Recklessly Provide Substantial Assistance’

On September 1, 2015, the Consumer Financial Protection Bureau (“CFPB”) won an important decision in which a federal court, for the first time, interpreted the meaning of “recklessly provid[ing] substantial assistance” under the Consumer Financial Protection Act (“CFPA”).2 Perhaps since it was an order denying the defendants’ motions to dismiss released just before the Labor … Continue Reading

CFPB Warns Again About Marketing Services Agreements

Following up on a series of enforcement actions against industry participants engaged in “marketing services agreements” (“MSAs”), the CFPB issued a Compliance Bulletin (No. 2015-15) entitled “RESPA Compliance and Marketing Services Agreements [“MSAs”].” (The Bulletin can be accessed by clicking here.) The thrust of the Bulletin is again warning companies that “many MSAs necessarily involve substantial legal and regulatory … Continue Reading

CFPB Moves to Ban Class Action Waivers But Will Not Ban Individual Arbitration

In a move that the financial industry long anticipated but nonetheless greeted with loud groans, the Consumer Financial Protection Bureau (“CFPB”) on October 7, 2015 proposed to ban class action waivers in contracts for consumer financial products and services. Although the proposed ban would not take effect for a few years, it would have a … Continue Reading

CFPB Issues Rule on Mortgage Guidelines for Special Classes of Creditors

The Consumer Financial Protection Bureau (“CFPB”) this week issued a final rule making a series of changes to its mortgage guidelines for small creditors and creditors in rural and underserved communities. In a series of rulemakings issued pursuant to the Dodd-Frank Act, the CFPB has applied special standards for mortgages extended by small creditors and … Continue Reading

CFPB’s Federal Court Action Against PayPal Sheds Further Light on the Meaning of ‘Abusive’ Acts or Practices

On May 19, 2015, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) filed a complaint and proposed consent order against PayPal, Inc. and its subsidiary Bill Me Later, Inc. (collectively, “PayPal”) in the U.S. District Court for the District of Maryland. If approved by the court, the settlement will require PayPal to pay $15 million … Continue Reading

CFPB’s Complaints Policy Spurs Many Complaints (From Industry)

Financial institutions are not happy about the CFPB’s announcement that it will begin posting the narratives of some consumer complaints in June. When the CFPB first proposed the idea last summer, banks and industry groups made several arguments against public complaint posting: the content of the complaints is unverified, complaints describe only negative – not … Continue Reading

“Abusive” further defined by court as CFPB case against ITT Tech moves forward

On March 9, District Judge Sarah Evans Barker issued her long-anticipated order on the motion to dismiss in CFPB v. ITT Educational Services, Inc., No. 1:14-cv-00292 (S.D. Ind.). Judge Barker denied ITT’s motion to dismiss the Bureau’s unfairness and abusiveness claims but granted it on the Bureau’s TILA claim. At 67 pages, the order provides … Continue Reading

CFPB Report Claims Arbitration “Less Beneficial To Consumers” than Individual or Class Litigation, Foreshadows Attempt to Impose Restrictions in Future

On March 10, Director Richard Cordray of the Consumer Financial Protection Bureau (“Bureau” or “CFPB”) presided over a Field Hearing on Pre-Dispute Arbitration Clauses, discussing what he described as the “key findings” of the Bureau’s long-awaited 700-page Arbitration Report to Congress published earlier that morning. Reed Smith attorney Deepa Zavatsky attended the hearing, where Cordray … Continue Reading

Reed Smith Adds Former CFPB Enforcement Counsel to its Financial Industry Group

Last week, former Consumer Financial Protection Bureau (CFPB) Enforcement Counsel Nicholas Smyth joined Reed Smith's Financial Industry Group, bringing expertise on the CFPB's approach to mortgage lending, auto lending, student lending, debt collection, credit reporting, and military lending. Smyth brings an insider's knowledge of the federal government's fastest-growing and increasingly feared agency. He was one of the longest-serving attorneys at the CFPB prior to joining the Firm, and he helped build the agency's Office of Servicemember Affairs and Office of Enforcement.… Continue Reading

Reed Smith Financial Services Regulatory Leader Weighs in on Mortgage Regulation

Len Bernstein, chair of Reed Smith’s Financial Services Regulatory Group and Managing Partner of the firm’s Philadelphia office, was recently quoted by the Legal Intelligencer regarding the extensive preparation regulatory lawyers and the mortgage industry have done to assist mortgage lenders and servicers in dealing with the changes in the regulatory landscape largely effective in … Continue Reading

Mortgage Originator Sentenced for Fraud – Reminder of Need for Third-Party Vigilance

On August 14, 2013, the former manager of an Allentown, Pennsylvania, mortgage loan origination company was sentenced to four years in prison and ordered to pay restitution of $979,562.20 in connection with a mortgage fraud conspiracy. According to the U.S. Attorney’s Office for the Eastern District of Pennsylvania (the “USAO”), the former general manager of … Continue Reading

CFPB May Expand the Reach of the FDCPA

This post was also written by Kenneth M. Kolaski. In a recent press release, the CFPB indicated that it may consider subjecting creditors to the requirements of the Fair Debt Collection Practices Act that are statutorily exempt. On July 10, 2013, the Consumer Financial Protection Bureau (“CFPB”) issued two important bulletins on debt collection, published … Continue Reading
LexBlog