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On September 8, a Texas federal judge ruled that the CFPB exceeded its authority by adopting a sweeping anti-discrimination policy last year. The CFPB adopted the policy in March 2022, via an update to its exam manual, stating that discrimination in any financial product is an “unfair” practice that can trigger liability under the federal prohibition against “unfair, deceptive or abusive acts or practices” or UDAAPs (we discussed this policy in previous posts here and here). The CFPB offered examples of practices that may be unfair because they are discriminatory, including offering one set of products or services to a certain customer demographic and a greater set of products or services to another customer demographic, providing inferior terms to one customer demographic as compared to another customer demographic, and engaging in targeted marketing or advertising in a discriminatory manner.

Continue Reading Texas Court Strikes Down CFPB UDAAP Policy

On September 29, the CFPB released a special edition of Supervisory Highlights on student loan servicing practices of loan servicers and schools lending to students directly. The report highlights three notable findings related to transcript-withholding practices: Federal Student Loan transfers, and Federal Student Loan payment relief and cancellation programs:

Continue Reading CFPB Supervisory Examinations Find Violations by Student Loan Servicers and University-Owned Lenders

Two weeks after the DFPI set a Dec. 9 effective date for its long-threatened commercial financing disclosure requirement (we discussed these regulations in a previous bog, here), the DFPI issued proposed commercial UDAAP and annual reporting regulations likely impacting many of the same companies. Specifically, the proposed regulations would apply to providers of commercial financing or other financial products and services to small businesses, nonprofits, and family farms, and would (i) expand the DFPI’s UDAAP authority, and (2) impose annual reporting requirements on covered providers (we briefly discussed these proposed regulations in a previous blog post here).

Continue Reading Proposed California Commercial UDAAP and Annual Reporting Regs to be Promulgated Under California Consumer Financial Protection Law

On June 28, the American Bankers Association, Consumer Bankers Association, Independent Community Bankers of America, and the U.S. Chamber of Commerce affirmed in a letter to CFPB Director Rohit Chopra that the CFPB should rescind its recent updates to the exam manual allowing for the examination of financial institutions unfair, deceptive, and abusive acts or practices or UDAAPs. The group conveyed to Director Chopra that “Congress did not authorize or intend for the CFPB to “fill gaps” between the clearly articulated boundaries of antidiscrimination statutes with its UDAAP authority.” (We discussed this exam manual update in a previous blog post here).

Continue Reading Industry Groups to CFPB: Take Back UDAAP Anti-Discrimination Policy

On March 30, the CFPB settled with a student loan servicer to resolve allegations that the servicer made deceptive statements to student loan borrowers and misrepresented their forgiveness and repayment options, including deceiving borrowers with Federal Family Education Loan Program (FFELP) loans about their eligibility for Public Service Loan Forgiveness (PSLF).  The consent order requires the servicer to pay a $1 million civil money penalty. Continue Reading CFPB Fines Student Loan Servicer $1 Million to Settle Alleged UDAAP Violations

On March 22, the CFPB issued Compliance Bulletin 2022-05 regarding potentially illegal practices related to consumer reviews.  The guidance states that consumer reviews impact company revenue and help consumers choose between financial providers, which can in turn “incentivize dishonest market participants to attempt to manipulate the review process, rather than compete based on the value of their services, which can frustrate a competitive marketplace.” Continue Reading CFPB Flexes UDAAP Muscle Over Contractual “Gag” Clauses and Fake Consumer Reviews

This week, CFPB Director, Rohit Chopra, appeared before the U.S. Senate Committee on Banking, Housing, and Urban Affairs and the U.S. House Committee on Financial Services in conjunction with the CFPB’s submission of its Semiannual Report to Congress.  In his prepared testimony before both committee, the Director highlighted some of the CFPB’s work over the past six months, which includes: Continue Reading CFPB Director Testifies Before Congress

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Many residential mortgage lenders currently have loan compensation plans that provide for a payment to loan originators of one commission amount for loans funded by the lender, and a smaller commission amount for loans that are brokered out to other lenders. While the CFPB never directly endorsed this result, they did not reject it either. In its Loan Originator Compensation Rule Resource Guide, the Mortgage Bankers Association provided the following illustration and comment when discussing the Loan Originator Compensation Rule’s prohibition against compensation based on a proxy for a term of a transaction:

Continue Reading CFPB Adjusts Long Time Position Relating to Loan Originator Compensation

The FTC recently published an advance notice of proposed rulemaking to discuss harms associated with the collection, processing, and selling of personal data. The FTC is inviting public comments on whether it should implement new rules on how companies:

Continue Reading FTC Signals Focus on Increasing Protections Around Personal Data

On August 11, the CFPB published a circular clarifying liability under consumer financial protection law for bank and nonbank financial companies that fail to safeguard consumer data. The circular describes how firms may be violating the CFPA’s prohibition on unfair acts or practices with respect to the handling of consumer data by not implementing adequate measures to protect against data security incidents. These data security incidents may lead to significant harm to a few consumers—who, for example, become victims of targeted identify theft after a breach—or may lead to harm of many consumers in the event of large scale, customer-base-wide breaches. The circular includes specific examples for reference.

Continue Reading CFPB Circular: Safeguard Consumer Data or Face Liability