Consumer Financial Services Law Blog
Dykema Gossett PLLC
Dykema Gossett PLLC

Consumer Financial Services Law Blog

Consumer Financial Services Law Blog

News and analysis regarding Consumer Financial Services litigation and regulation, and activities of the Consumer Financial Protection Bureau


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Showing 306 posts in CFPB.

Take a Second Look at Incentive Programs, the CFPB Warns

The CFPB is warning financial services companies to carefully evaluate their employee incentive programs. Specifically, companies should scrutinize bonus structures that tether compensation and employment status to unrealistic sales goals. Such bonus structures, the CFPB cautions, “may intentionally or unintentionally encourage illegal practices such as unauthorized account openings, unauthorized opt-ins to overdraft services, deceptive sales tactics, and steering consumers into less favorable products.”  Read More ›

The CFPB’s Small-Dollar Lending Proposal: First UDAAP Rulemaking Proposal Hits the Streets

After much anticipation, the Consumer Financial Protection Bureau (“CFPB”) has released its proposed small-dollar lending rule. Spanning 1,334 pages in length, the proposal marks the first time the CFPB has exercised its authority to issue regulations prohibiting unfair, deceptive, or abusive acts or practices (“UDAAP”). Until now, the CFPB has elected to define UDAAP through its enforcement actions. And despite the proposal’s length, it does not appear that it fully covers the waters of consumer credit in the CFPB’s sights. Accompanying the proposed rule is a Request for Information (“RFI”) asking additional questions about certain other high-cost, longer-term installment loans and open-end lines of credit, raising the possibility of additional rulemakings in the future.   Read More ›

CFPB Releases Arbitration Proposal

Today, the Consumer Financial Protection Bureau (the “CFPB”) released much-anticipated proposed rules for mandatory arbitration clauses, which the CFPB colloquially refers to as “contract gotchas.” The proposed rules follow on the heels of the CFPB’s March 2015 Arbitration Report, which the CFPB concluded demonstrates that mandatory arbitration clauses are detrimental to consumers. As expected, the proposed rules evidence the CFPB’s concerns around mandatory arbitration clauses. Read More ›

CFPB to Issue Proposal in July Amending Rules on TILA-RESPA Integrated Disclosures

Real estate lenders and agents struggling with the new TILA-RESPA Integrated Disclosure rules will have the opportunity to suggest improvements to the rules this summer. On April 28, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray sent a letter to eight financial industry trade groups stating that the agency intends to propose new amendments in late July 2016 to the rules synthesizing mortgage lending disclosures under the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA). Issued pursuant to the Dodd-Frank Act, the rules are known as the TILA-RESPA Integrated Disclosures (TRID) rule, also referred to by the CFPB as the Know Before You Owe rules. Read More ›

CFPB Takes First Data Security Enforcement Action Against Dwolla

The Consumer Financial Protection Bureau (“CFPB”) made headlines last week by taking action against Dwolla, an online and mobile payments platform. The CFPB imposed a $100,000 penalty against Dwolla, and while the dollar amount of the penalty may appear to be small compared to other civil money penalties, the action is significant because it is the first action the CFPB has taken in the data security area and provides insight into future enforcement activities surrounding data security by the CFPB. It also serves as a notable reminder of the CFPB’s broad enforcement powers, which go beyond financial institutions to non-FI companies that deliver financial products and services to consumers. While the CFPB lacks authority over the substantive data security requirements that are enforced by the federal financial regulators, that poses no obstacle to the CFPB’s ability to take an action, like this, initiated under its authority to police “deceptive” acts or practices. Read More ›

CFPB Card Act Report Identifies Five Credit Card Practices That “Warrant Further Scrutiny”

On December 3, the CFPB released its Report required by the Credit Card Accountability Responsibility and Disclosure Act (CARD Act), with its perspective on the current state of the credit card market. The Report asserts that, since the enactment of the CARD ACT, consumers have avoided a combined $16 billion in over-limit and late fees. The report also posits that credit has generally become more available to consumers, and the number of new accounts has grown faster than in almost every other major consumer credit market. Read More ›

Effective Immediately: New Exception to Annual Privacy Notice Requirement

An amendment to the Gramm-Leach-Bliley Act (“GLBA”) that was signed into law December 4, 2015, takes effect immediately and provides a new exception to the annual privacy notice requirement under GLBA. The existing language in GLBA requires financial institutions to provide their customers with initial and annual privacy notices regarding their privacy policies and information-sharing practices. Read More ›

New CFPB Guidance for Preauthorized Transfers

On November 23rd, 2015 the Consumer Financial Protection Bureau (“CFPB”) released Compliance Bulletin 2015-06 (the “Bulletin”), which clarifies requirements under the federal Electronic Fund Transfer Act (“EFTA”) and Regulation E for obtaining consumer authorizations for preauthorized electronic fund transfers (“EFTs”). The new guidance touches upon two issues: (1) obtaining oral authorizations for EFTs over the phone; and (2) obligations to provide a copy of EFT authorizations to consumers.  Read More ›

Surge in Subprime Auto Lending Prompts Government Concerns

Auto finance companies have witnessed a surge in lending activity, a sign that the economy is gradually improving. However, government agencies are identifying and taking action to address increased lending at high interest rates to borrowers with poor credit, similar to lending practices that were the basis for subprime mortgage lending less than a decade earlier. Read More ›

CFPB Consent Order Holds Import for Supervised Entities Using Third-Party Vendors

The Consumer Protection Financial Bureau (“CFPB”) announced on October 29, 2015, that it took action against two of the largest employment background screening report providers, General Information Services (“GIS”) and its affiliate e-Background-checks.com, Inc. (“e-Background-checks.com”) for alleged violations of the Fair Credit Reporting Act. The press release also linked a Consent Order, by which GIS and e-Background-checks.com agreed to pay a $2.5 million penalty and provide $10.5 million to affected consumers, among other sanctions. Read More ›