July 17, 2018

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CFPB Data Collection Freeze Impacting CFPB Examinations

Since Mick Mulvaney’s appointment by President Trump as CFPB Acting Director, there have been widespread media reports about Mr. Mulvaney’s plans to impose a freeze on the CFPB’s collection of personally identifiable information (PII), such as individual loan level data, until the CFPB improves its data security systems.  Mr. Mulvaney’s concerns about the CFPB’s data security systems were reportedly prompted in part by reports issued by the Office of Inspector General for the CFPB that found deficiencies in the CFPB’s data security practices.

Since the CFPB has not yet issued any information regarding the freeze’s implementation, its full scope and impact remain unclear.  However, in connection with assisting clients to prepare for CFPB exams, we have learned that the freeze is having a significant impact on the flow of information to CFPB examiners.  Moreover, it appears that because CFPB examiners may not yet have clear direction regarding how they should implement the freeze, they are taking different approaches.

Prior to the freeze, companies had been submitting information requested by CFPB examiners by uploading documents to the CFPB’s Extranet.  We understand the CFPB has temporarily halted use of the Extranet, however, apparently in response to Mr. Mulvaney’s concerns, and it appears that CFPB Supervision management is grappling with how to sufficiently address Mr. Mulvaney’s concerns so that scheduled examinations can proceed.  For example, examination teams have preliminarily described different approaches for how to establish workarounds, including providing all responses printed onto paper, to be shredded at the conclusion of the exam, or providing company computers for examiners to view company responses which may include PII.  The freeze and such workarounds will likely increase the burden for companies undergoing examinations but may also reduce the scope of what examiners will be able to review.

It also remains unclear how the freeze will impact other supervisory submissions, such as supporting documents submitted in connection with responses to Potential Action and Request for Response (PARR) letters.  We are working closely with clients to assist them with issues raised by the new “freeze”-related procedures.

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About this Author

James Kim, Ballard Spahr Law Firm, Los Angeles, Financial Law Litigation Attorney
Of Counsel

Mr. Kim advises companies and individuals in matters involving financial regulation and litigation, and the myriad of federal consumer financial laws, such as Title X of Dodd-Frank (UDAAP), TILA, RESPA, EFTA, and the FDCPA. He has represented clients in examinations and investigations with the Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), U.S. Department of Justice (DOJ), U.S. Securities and Exchange Commission (SEC), and various state and local agencies. His practice focuses on...

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Bowen Ranney, Ballard Spahr Law Firm, Washington DC, Finance Law Attorney
Associate

Bowen "Bo" Ranney is an associate in the Consumer Financial Services and Mortgage Banking Groups. Mr. Ranney helps clients implement compliance systems, and prepare for Consumer Financial Protection Bureau (CFPB) exams. He has represented clients in examinations and investigations with the CFPB, Federal Deposit Insurance Corporation (FDIC), U.S. Department of Justice (DOJ), and various state and local agencies. He advises clients on compliance with the full range of federal and state consumer financial services laws, including the various laws enumerated by the Dodd-Frank Act; prohibitions against unfair, deceptive, and abusive acts and practices; and usury, licensing, and privacy laws.

Before joining Ballard Spahr, Mr. Ranney was a Presidential Management Fellow and later an Examiner with the CFPB, working in both supervision and enforcement. He played a key role on the team that filed the CFPB’s first application for a temporary restraining order. In that matter, he investigated and documented activities violating federal consumer financial protection laws and developed the case to support the CFPB’s lawsuit. He has been involved in cases alleging violations of the Consumer Financial Protection Act (Title X of the Dodd-Frank Act), Fair Debt Collection Practices Act, Mortgage Assistance Relief Services Rule, Telemarketing Sales Rule, and other federal consumer financial services laws.

202-661-2234