June 26, 2022

Volume XII, Number 177

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June 24, 2022

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June 23, 2022

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CFPB Sues Credit Reporting Agency and Former Senior Executive

On April 12, the CFPB filed a complaint against a credit reporting agency (CRA), two of its subsidiaries, and a former senior executive for violating a 2017 consent order issued to the company related to alleged deceptive marketing regarding its credit scores and other credit-related products.  The CFPB alleges that the CRA continued its unlawful behavior and employed deceitful digital “dark patterns” to profit from customers and also alleges violations of the CFPA, EFTA/ Regulation E, and the FCRA/Regulation V.  The order seeks a permanent injunction, damages, civil penalties, consumer refunds, restitution, disgorgement and the CFPB’s costs.

The complaint alleges that the corporate defendants failed to take actions specifically required by the 2017 consent order, including providing a checkbox requiring consumers to affirmatively consent to automatic renewal after a free trial and providing a simple mechanism by which consumers could cancel purchases and stop recurring payments.  In addition, the corporate defendants continued misrepresenting the nature of a monthly credit monitoring product by making it seem as if it were simply a way to view one’s credit score and further misrepresenting that payment information was simply for identification purposes rather than making it clear that consumers were purchasing something.

CFPB Director Rohit Chopra indicated in comments announcing the lawsuit that the CFPB will continue to focus on repeat offenders through supervision and enforcement.  According to Chopra, the CFPB will closely collaborate with state and federal authorities and has directed staff to focus more scrutiny on other business units under their corporate control to help identify and prosecute the totality of the wrongdoing.

Putting it Into Practice:  This complaint marks the second lawsuit filed against companies for violating the terms of previously issued consent orders since Director Chopra assumed his position last year (we discussed this earlier complaint in a previous blog post here).  This complaint demonstrates the CFPB’s intent to pursue several of Director Chopra’s previously-articulated priorities, including punishing repeat offenders, holding executives accountable, and addressing alleged credit reporting agency misconduct.  This lawsuit is a significant development that should be considered by those subject to outstanding enforcement measures, as it demonstrates the CFPB’s intent to pursue several of Director Chopra’s priorities.

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 108
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About this Author

Moorari Shah Bankruptcy Lawyer Sheppard Mullin Law Firm
Partner

Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm's Los Angeles and San Francisco offices. 

Areas of Practice

Moorari combines deep in-house and law firm experience to deliver practical, business-minded legal advice. He represents banks, fintechs, mortgage companies, auto lenders, and other nonbank institutions in transactional, licensing, regulatory compliance, and government enforcement matters covering mergers and acquisitions, consumer and commercial lending, equipment finance and leasing, and supervisory examinations,...

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A.J. S. Dhaliwal Bankruptcy Attorney Sheppard Mullin Washington DC
Associate

A.J. is an associate in the Finance and Bankruptcy Practice Group in the firm's Washington, D.C. office. 

A.J. has over a decade of experience helping banks, non-bank financial institutions, and other companies providing financial products and services in a wide range of matters including government enforcement actions, civil litigation, regulatory examinations, and internal investigations.

With a diversified regulatory, compliance, and enforcement background, A.J. counsels financial institutions in matters involving...

202-747-2323
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