Catagory:Bureau of Consumer Financial Protection (CFPB)

1
District Court Gives CFPB Rare Loss on the Merits by Granting Summary Judgment on Respa Section 8 Claims
2
CFPB Director Informs Consumer Advisory Board That Bureau Will Not Shy Away from Issuing Debt Collection Proposed Rule
3
Financial Choice Act Moves to the House Floor
4
“Survey Says”: CFPB Report Provides Further Insight Into Forthcoming Debt Collection Regulations
5
Down But Not Out: The CFPB’s Future May Be Uncertain, But Industry Participants Must Remain Vigilant
6
The Post-Election FinTech World: Are Happy Days (for Bankers) Here Again?
7
Webinar: CFPB Final Rule on Prepaid Accounts: The Rules and Their Short and Long Term Impacts
8
“Not A Close Call”: The D.C. Circuit Restores The Safe Harbor To Section 8 of RESPA
9
Who Bears the Risk? Federal Court Holds That a Purchaser of Unsecured Consumer Loans Is the “True Lender,” Voiding Enforceability of the Loans
10
Change Order: The CFPB Previews Its Proposed FDCPA Regulations

District Court Gives CFPB Rare Loss on the Merits by Granting Summary Judgment on Respa Section 8 Claims

By David D. Christensen and Matthew N. Lowe

In a win for real estate settlement service providers, another federal court has rebuffed the Consumer Financial Protection Bureau’s (“CFPB”) aggressive interpretation and enforcement of Section 8 of the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-2617 (“RESPA”). Specifically, in Consumer Financial Protection Bureau v. Borders & Borders, PLC, the District Court for the Western District of Kentucky recently granted the defendants’ summary judgment motion and dismissed the CFPB’s RESPA Section 8(a) claims. See 2017 WL 2989183 (W.D. Ky. July 13, 2017).

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CFPB Director Informs Consumer Advisory Board That Bureau Will Not Shy Away from Issuing Debt Collection Proposed Rule

By Brian M. Forbes,  Gregory N. Blase, Andrew C. Glass and Roger L. Smerage

In prepared remarks delivered to the Consumer Advisory Board on Thursday, June 8, 2017, Consumer Financial Protection Bureau Director Richard Cordray explained that the CFPB is moving forward with its long-anticipated debt collection rules. K&L Gates previously chronicled the CFPB’s efforts to promulgate debt collection rules here, here, and here.

The Director emphasized his view that new debt collection rules are necessary because of the age of the Fair Debt Collection Practices Act—enacted in 1977—and the statute’s inability to fit modern methods of communication. According to the Director, the forthcoming rules would benefit consumers and industry participants by clarifying what constitutes unfair collection practices. Substantively, the Director focused on the portion of the CFPB’s July 2016 outline aimed at ensuring that debt collectors possess correct information about debts they are seeking to collect and consumers who owe those debts. In a notable shift, the Director indicated that the CFPB is prepared to issue a single set of debt collection rules relating to the gathering of information by and transfer of information between first-party creditors and third-party debt collectors. Acknowledging that the shift will require the CFPB to take some additional time to iron out “intertwined issues,” the Director suggested that the CFPB will try to fast-track other aspects of its proposed rulemaking, including the information third-party debt collectors must disclose to consumers and the manner in which third-party debt collectors interact with consumers.

K&L Gates will continue to monitor and report on further developments.

Financial Choice Act Moves to the House Floor

By Daniel F. C. CrowleyBruce J. HeimanWilliam A. KirkKarishma Shah PageMark A. Roszak and Eric A. Love

On May 4, the House Financial Services Committee (“HFSC”) concluded its three-day markup of H.R.10, the Financial Choice Act (“FCA”), a bill to reform the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). The HFSC reported the bill favorably to the full House by a vote of 34-26. All 19 Democratic amendments were rejected on party-line votes. Republicans did not offer any amendments but focused their efforts on raising concerns about the extent to which Dodd-Frank has stifled economic growth and put taxpayer money at risk. Committee members debated a number of the more controversial provisions of the FCA, including Title VII to restructure the Consumer Financial Protection Bureau (“CFPB”) and remove its unfair, deceptive, or abusive acts or practices (“UDAAP”) authority; Section 841 to repeal the Department of Labor’s conflict of interest-fiduciary duty rule; Section 111 to repeal the Federal Deposit Insurance Corporation’s (“FDIC”) Orderly Liquidation Authority; Title IX to repeal the Volcker Rule; and numerous reforms to the Securities and Exchange Commission’s (“SEC”) shareholder proxy voting rules.

To read the full alert, click here.

“Survey Says”: CFPB Report Provides Further Insight Into Forthcoming Debt Collection Regulations

By Andrew C. Glass, Brian M. Forbes, Gregory N. Blase, Roger L. Smerage, and Hollee M. Watson

The Consumer Financial Protection Bureau (“CFPB”) recently released a report detailing the results of a first-of-its-kind survey on consumer experiences with debt and debt collection. The CFPB conducted the survey in connection with its ongoing effort to promulgate the first-ever federal debt collection regulations. The agency sent the survey to nearly 11,000 consumers, of whom only a little over 2,000 (just less than 20%, roughly) responded. The CFPB explained that “[t]o ensure that the survey included a sufficient number of responses from consumers who had experienced debt collection,” it targeted consumers with recent debt collection experiences at a higher rate than other consumers. Of the approximately 20% of consumers who responded to the survey, 30% were consumers with long-term debt whereas only 15% were respondents with more recent debt. The survey was comprised of 67 questions ranging from the consumers’ general financial experiences and preferences for the ways in which collectors could contact them to questions about specific debt collection attempts in the year preceding the survey (which was conducted between December 2014 and March 2015). The latter category inquired about the types of debt in collection, the manner and frequency of contacts, whether there were any erroneous attempts to collect a debt, and whether the consumer paid the debt after being contacted. Notably, the CFPB did not release the results for all 67 questions.

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Down But Not Out: The CFPB’s Future May Be Uncertain, But Industry Participants Must Remain Vigilant

By Daniel F. C. Crowley, Soyong Cho, Jennifer Janeira Nagle, Roger L. Smerage, Jeremy M. McLaughlin, Mark A. Roszak, and Brandon R. Dillman

Since its inception, the Consumer Financial Protection Bureau (“CFPB”) has been a lightning rod, and there is little dispute that recent events threaten, at a minimum, the current operational structure of the CFPB and possibly its future existence. Specifically, the constitutionality of the CFPB has been under direct judicial attack and President-elect Trump’s incoming administration, and legislative reform that may follow, threatens to make good on Mr. Trump’s plan to “dismantle the Dodd-Frank Act,” which created the CFPB, “and replace it with new policies to encourage economic growth and job creation.” In the aftermath of these developments, there has been no shortage of predictions on the CFPB’s future and some predictions allude to a near certain doomsday for the agency. But many may have rushed to judgment. While the continued existence of the CFPB is certainly an open question, it is more likely that the CFPB will receive a makeover, not a shutdown.

To read the full alert, click here.

Webinar: CFPB Final Rule on Prepaid Accounts: The Rules and Their Short and Long Term Impacts

Please join us for a webinar on the Consumer Financial Protection Bureau’s (“CFPB”) final rule (the “Rule”) on prepaid accounts.

The webinar will:
• Review the Final Rule in detail.
• Note industry responses to the Rule.
• Make projections regarding its short and long term impacts.

Panelists:
Linda C. Odom, Partner, K&L Gates
Judith E. Rinearson, Partner, K&L Gates
Jennifer L. Crowder, Counsel, K&L Gates
Eric A. Love, Law Clerk, K&L Gates
Ernest L. Simons, Associate, K&L Gates
Tyler Kirk, Associate, K&L Gates

To register, click here. Log-in instructions will be sent via email the day before the webinar. You must register to receive the log-in instructions.

“Not A Close Call”: The D.C. Circuit Restores The Safe Harbor To Section 8 of RESPA

By Irene C. Freidel

Noting that “[t]he basic statutory question in this case is not a close call,” the D.C. Circuit has held that a bona fide payment by one settlement service provider to another does not violate Section 8(a) of the Real Estate Settlement Procedures Act (RESPA) if the payment is reasonably related to the market value of the goods, services, or facilities provided. See PHH Corp. v. Consumer Financial Protection Bureau (D.C. Cir. Oct. 11, 2016). The court’s conclusion was mandated by the unambiguous text of Section 8(c) of RESPA, along with the U.S. Department of Housing and Urban Development’s (HUD’s) long-standing interpretations of the same statutory provision.

To read the full alert, click here.

Who Bears the Risk? Federal Court Holds That a Purchaser of Unsecured Consumer Loans Is the “True Lender,” Voiding Enforceability of the Loans

By Irene C. Freidel and David D. Christensen

A California federal court has held that the purchaser of small-dollar consumer loans is the “true lender” and thus subject to state usury laws, even though a separate tribal entity funded and closed the loans in its own name. See Consumer Financial Protection Bureau v. CashCall, Inc*. The court’s holding, which adopts the arguments of the Consumer Financial Protection Bureau (“CFPB”) and renders the loans serviced by CashCall unenforceable, challenges the business model that many marketplace lending platforms use to offer alternative, unsecured loans to consumers. Generally speaking, partnerships between marketplace platforms and tribal entities, state-chartered (and federally insured) banks, or national banks are intended to protect the platforms from the substantial licensing and compliance burden of state lending and licensing laws, and also to permit loans that might otherwise exceed the borrower’s home state usury limit. The recent CashCall decision, however, is another reminder that state and federal regulators, as well as plaintiffs’ attorneys, may be able to pierce these partnerships where a court finds that the financial institution funding and closing the loan does not bear substantial risk on those loans.

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Change Order: The CFPB Previews Its Proposed FDCPA Regulations

By Andrew C. Glass, Brian M. Forbes, Gregory N. Blase, and Roger L. Smerage

The Consumer Financial Protection Bureau (“CFPB”) recently took the next step toward promulgating regulations under the Fair Debt Collection Practices Act (“FDCPA”) by releasing its “Outline of Proposals under Consideration and Alternatives Considered” (the “Outline”). The Outline sheds light on the approach the CFPB may take in regulating the debt-collection industry. As detailed in this alert, the proposed approach would implement comprehensive and substantial changes.

To read the full alert, click here.

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