The CFPB’s most recent Semi-annual Report detailed the enforcement actions it was involved in from October 1, 2016 through September 30, 2017. Although, the current CFPB leadership under Acting Director Mick Mulvaney is very different from that of former Director Richard Cordray, whose tenure includes the period above, an examination of these enforcement actions can still provide valuable insight about the CFPB to financial institutions and their risk and compliance management.
Length, Status of CFPB Enforcement Action Proceedings
Of the 54 enforcement action proceedings summarized in its April 2, 2018 Semi-annual Report, the majority (27) were originated by the CFPB in 2017. Another 20 were leftover from work begun in 2016 (12) and 2015 (8). Seven total actions lingered from 2014 (4), 2013 (2), and 2012 (1).
In 31 of the 54 actions, the result was an Order and/or Final Judgement against the defendant(s), while 20 cases are still pending and three were dismissed.
Make-up of Defendants in CFPB Enforcement Actions
The majority of actions described by the CFPB involve traditional financial institutions, however, other less traditional financial institutions (as per the USA PATRIOT Act) as well as other types of entities were caught up by the CFPB’s broad reach. These include debt relief firms (2), debt collectors (2), payday lenders (5), title companies (2), lead aggregators (2), laws firms (5), credit reporting agencies (3), and pawn brokers (3).
Alleged Violations in CFPB Enforcement Actions
Overwhelmingly, the enforcement actions, either specifically (11) or generally (30), described alleged violations of Unfair, Deceptive and Abusive Acts or Practices (UDAAP) as per the Consumer Financial Protection Act (CFPA). At least under Cordray, UDAAP was clearly a go-to violation for the CFPB, as its broad definitions provide the Bureau with signficant leeway. Only time will tell if the CFPB under Mulvaney continues this trend.
Other allegations include, but were not limited to, violations of the Real Estate Settlement Procedures Act (RESPA) (4), the Home Mortgage Disclosure Act (HMDA) (1), the Electronic Funds Transfer Act (EFTA) and Regulation E (3), and the Financial Credit Reporting Act (FCRA) (3).
CMPs and Other Fines in CFPB Enforcement Actions
Perhaps the most telling statistics in regard to the CFPB’s enforcement actions are the monetary ones.
- The CFPB meted out 37 civil money penalties (CMPs) totalling $117.85 million.
- The largest CMP was $40 million, followed by a $20 million CMP.
- Out of the 37 CMPs, 16 were over $1 million.
- The CFPB ordered defendants to pay restitution/redress/refunds/compensation to victims in the total amount of $279.65 million.
- The largest redress demand was $107 million, followed by $95 million.
- One defendant had to forgive or reduce loan amounts totaling $183.3 million.
- The CFPB ordered disgorgement, the repayment of ill-gotten gains, in the amount of $1.35 million.