Judge Admonishes CFPB For Exceeding Authority in Attempt to Obtain Information From Accreditor of For-Profit Colleges
In August 2015, the Consumer Financial Protection Bureau (CFPB) issued a Civil Investigative Demand (Demand) to the Accrediting Council For Independent Colleges and Schools (ACICS), an accreditor of for-profit colleges, seeking certain information. The stated purpose of the CFPB’s Demand was to determine "whether any entity or person has engaged or is engaging in unlawful acts and practices in connection with accrediting for-profit colleges." The CFPB’s Demand required the ACICS to provide testimony regarding its policies, procedures, and practices relating to the accreditation of several schools and to also provide written responses to certain interrogatories. The CFPB argued that it was entitled to such information as part of its investigation into deceptive practices at for-profit colleges tied to their student-lending activities. The ACICS refused to comply with the Demand and the CFPB filed a motion with the U.S. District Court for the District of Columbia seeking to compel the ACICS to comply with its Demand.
On April 21, 2016, Judge Richard J. Leon issued an Opinion and ruled that the CFPB was exceeding its statutory authority in seeking such information from the ACICS and denied its motion to compel compliance with the Demand. Judge Leon was critical of the CFPB’s attempt to obtain such information and admonished the CFPB for exceeding its authority. He states in the Opinion that "although it is understandable that new agencies like the CFPB will struggle to establish the exact parameters of their authority, they must be especially prudent before choosing to plow head long into fields not clearly ceded to them by Congress." Generally, as the Opinion notes, government agencies are given broad deference when interpreting the scope of their authority, and only where it is clear that an agency is exceeding its authority does a court intervene. Thus, it is an unusual step for a court to overrule a federal agency when interpreting the scope of its authority. It is unclear whether the CFPB will appeal the ruling.