January 27, 2020

January 27, 2020

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CFPB to look to state AGs for more leadership in enforcement arena

In remarks yesterday at the winter meeting of the National Association of Attorneys General in Washington, D.C., Mick Mulvaney indicated that the CFPB will be looking to state attorneys general for “much more collaboration and much more leadership” when deciding which enforcement cases to bring.

Mr. Mulvaney stated that a significant, although not determinative, factor in the CFPB’s decision to initiate an enforcement action in a particular case will be whether state AGs or regulators are also considering whether to take enforcement action.  He stated that if state AGs “are not bringing an action we are looking at, I’m going to want to know why.”  More specifically, he would want to know whether the state’s reason is lack of resources or other factors unrelated to the merits of an action or whether it is that the state AG or regulator thinks the conduct in question is not illegal.

In addition to various federal consumer protection statutes that give direct enforcement authority to state AGs or regulators, Section 1042 of the Consumer Financial Protection Act authorizes state AGs and regulators to bring civil actions to enforce the provisions of the CFPA, most notably its prohibition of unfair, deceptive or abusive acts or practices.  A state AG or regulator, before filing a lawsuit using his or her Section 1042 authority, must notify the CFPB and Section 1042 allows the CFPB to intervene as a party and remove an action filed in state court to federal court.

In response to a follow up question from Pennsylvania Democratic AG Josh Shapiro regarding the CFPB’s current philosophy on a state’s use of its Section 1042 authority, Mr. Mulvaney indicated that the CFPB will consider Section 1042 notices it receives from states on a case by case basis and does not plan to “get in the way” of states seeking to bring such actions (although he referenced the CFPB’s authority to intervene and oppose an action).  He stated that the CFPB’s primary interest is to expend its efforts on cases that are “on solid legal grounds” and not on “creative claims.”

Mr. Mulvaney reiterated his previous statements that the CFPB will no longer be “pushing the envelope” or engaging in “rulemaking by enforcement” and intends to let industry know what the rules are before bringing an enforcement alleging violations of such rules.  He indicated that the CFPB will be spending more time on consumer education efforts and engaging in more cost-benefit or quantitative analysis in rulemaking and less qualitative analysis.  He identified the prevention of elder financial abuse as a priority issue for the CFPB and stated that complaint volume will be a significant factor in how the CFPB sets its priorities (contrasting the high volume of debt collection complaints with the low volume of complaints about payday and other short term loans).

Mr. Mulvaney also indicated that the CFPB plans to be responsive to the perception that the CFPB has “listened more than it has heard” the views of stakeholders (i.e. that the CFPB has already decided what approach it will take and is just “checking a box” when soliciting input).

Copyright © by Ballard Spahr LLP


About this Author

Barbara S. Mishkin, Ballard Spahr, Philadelphia, Deceptive Practices Lawyer, Fair Debt Collection Practices Act, Gramm Leach Bliley
Of Counsel

Barbara Mishkin focuses on consumer compliance and banking law. The federal laws with which Ms. Mishkin has dealt extensively include the Truth in Lending Act, Equal Credit Opportunity Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, and Gramm-Leach-Bliley Act. She also has significant experience with state usury and lender licensing laws, as well as state laws prohibiting unfair and deceptive acts and practices.

American Bar Association, member, Consumer Financial Services Committee;...