Posts tagged ‘Enforcement actions’

Are You Using Your Credit Reports Illegally?

I’m asking this question to highlight an enforcement action announced by the CFPB yesterday against several companies which, if the allegations are true, blatantly violated several sections of the Fair Credit Reporting Act (FCRA) by obtaining credit reports under false pretenses and passing them around like stewardesses passing  out airline peanuts. I want to highlight the case not only because of its accusations, but because I wanted to provide you an ever so gentle reminder to use your credit reports consistent with the reasons you obtained them in the first place.

15 U.S.C. 1681b(f) permits entities to obtain prescreened credit reports provided that the individuals who qualify under the criteria will receive a firm offer of credit. A “firm offer” is an offer that will be honored subject to certain exceptions. The bottom line is that credit reports are not to be used simply to facilitate marketing, but are instead to be used for legitimate underwriting purposes.

The lawsuit that the CFPB announced yesterday is against several companies, ranging from a mortgage broker to a student loan debt consolidator to a mortgage lender that apparent did not get this memo. For instance, Monster Loans obtained prescreened lists from Experian, ostensibly to offer mortgage loans. There would, of course, be nothing wrong with this if that was all that Monster Loans used these lists for. However, Monster Loans subsequently distributed these lists to third parties, including an entity that specialized in student loan debt consolidation.

Although I’m concentrating on the FCRA part of the complaint, the defendants are also accused of engaging in unfair and deceptive practices, and the Telemarketing and Consumer Fraud and Abuse Prevention Act by marketing these deceptive loan products over the phone. This allegation underscores, yet again, why it is so important for all institutions to understand TCPA and ensure proper compliance.

On that brief note, its time for you to receive my annual Super Bowl prediction, which as you all know, is considered tier-one capital for credit unions and their employees. I like the Seahawks to take on the Chiefs with the Seahawks winning in a dramatic last-second field goal by the score of 20-17. Peace out.

January 10, 2020 at 9:18 am Leave a comment

New Director Reconsiders Pending Legal Actions

Image result for mick mulvaney

Although much of the early talk about a Trump appointed Director of the CFPB has centered on the potential for regulatory relief, the place where we will see the quickest and most dramatic shift is in the use of enforcement actions. Let’s not forget that the CFPB has aggressively used its UDAP powers and enforcement authority to take legal actions against alleged wrong-doers. Acting Director Mulvaney is already decisively changing the Bureau’s use of these powers.

Exhibit 1 is Nationwide Biweekly Administration, an Ohio-based company that transmits funds from consumers to their mortgage servicers. They have been sued by the Bureau over claims that it misrepresented the terms of its product, which enables consumers to make biweekly mortgage payments. The Bureau has now announced that it was no longer opposing a company’s request that the CFPB not be allowed to collect a $9 million judgment against it. The Bureau’s decision comes just days after it had filed a motion in opposition to the company’s request for a stay.

Then there is the granddaddy of them all. As readers of this blog know, in PHH Corporation, et. al. v. CFPB, the issue being litigated is the very constitutionality of the Bureau. Specifically, the Court of Appeals for the D.C. Circuit has already ruled that the Bureau’s single director structure is unconstitutional and that the President must be able to fire the Director at will. This case is being appealed but if the CFPB decides not to contest this ruling, it would effectively concede that it is, as structured by Congress, unconstitutional.

While there are many of us who feel that this is precisely the conclusion that the Court should come to, any decision along these lines will create an uproar bigger than the Giants’ decision to bench Eli Manning. Trust me, it was a big deal.

The bottom line is this: the CFPB has not only been an incredibly aggressive regulator but is also an aggressive enforcer of consumer protection laws as it feels they should be interpreted. Again, for those of us who can’t stand regulation through litigation, pulling back on the CFPB’s reigns is a welcomed development. But the number of important enforcement actions and cases in which the CFPB is currently involved underscores why the battle for the temporary leadership of the CFPB is so important.


December 7, 2017 at 9:43 am Leave a comment

Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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