Since June 13, the Consumer Financial Protection Bureau (CFPB) has issued five settlement notices for a total of over $361 million in restitution or redress and over $16 million in civil money penalties (CMPs). Under the administration of former CFPB director Richard Cordray, that may not have come as a surprise. But considering that under acting director Mick Mulvaney, the CFPB had only issued one other settlement notice in 2018, that of Wells Fargo, this flurry of recent activity is somewhat unexpected.
CFPB Settlements in Last Six Weeks
A review of the five settlement notices indicates that violations of the unfair, deceptive or abusive acts and practices (UDAAP) section of the Consumer Financial Protection Act (CFPA) account for the majority of issues. Violations of the Truth in Lending Act (TILA) also appear in more than one settlement.
Here is a brief synopsis of the notices:
July 20 Settlement with TCF Financial
In early 2017, the CFPB alleged in a Complaint filed in court that this regional bank had violated Reg E and the CFPA. In September of the same year, the bank filed a Motion to Dismiss, which was only partially upheld by the court. While the Reg E claim was dismissed, the CFPA claim stood, although it was “limited to those claims to customers who opened their accounts on or after July 21, 2011.”
The CFPA claim stemmed from alleged deceptive and abusive conduct by the bank in regard to its overdraft services. Specifically, “Banks must first obtain a consumer’s consent before they can lawfully charge overdraft fees on one-time debit purchases and ATM withdrawals. When attempting to obtain this consent, TCF obscured the fees it charged and made consenting to overdraft fees seem mandatory for new customers to open an account.”
TCF was ordered to pay $25 million in restitution and a $5 million CMP, however, the CFPB agreed to accept a $3 million CMP in consideration of the correlating CMP issued by the Office of the Comptroller of the Currency (OCC).
July 19 Settlement with Triton Management Group
This small-dollar lender is alleged to have violated TILA and the CFPA by engaging in deceptive acts or practices when it misrepresented finance charges on auto loans in Mississippi. The judgment calls for equitable monetary relief in the amount of $1,522,298, which represents the amount customers paid in excess finance charges. The CFPB, however, indicated it would accept $500,000 to satisfy this obligation, in part because of the institution’s “lack of financial resources.” This was also noted as the reason for the $1 CMP imposed on Triton as part of the settlement.
July 13 Settlement with National Credit Adjusters and its CEO
The CFPB alleges that this firm engaged in “unlawful debt collection practices,” which violate the CFPA. The settlement notes that, the firm “engaged in unfair and deceptive acts or practices in the collection and sale of consumer debt.”
The firm and its former CEO were each fined $3 million, however, the CFPB said that, “full payment of those amounts is suspended” as long as National Credit Adjusters pays a $500,000 CMP and the former CEO pays a $300,000 CMP.
June 30 Settlement with Citibank
After conducting an internal review, Citibank self-identified and self-reported violations of TILA to the CFPB. Per the settlement, Citibank agreed to pay $335 million in restitution to affected customers. The CFPB did not assess a CMP because the bank discovered the violations on its own and voluntarily reported them.
June 13 Settlement with Security Group, Inc.
The settlement agreement alleges that Security Group, Inc., which provides consumer loans, “engaged in unfair acts or practices” in violation of the CFPA. The notice also alleges violations of the Fair Credit Reporting Act (FCRA).
Specifically, “Respondents visited consumers’ homes and places of employment, as well as the homes of their neighbors, to collect or attempt to collect delinquent debt.” This is alleged to have occurred over the course of 12 million visits to over 1.3 million customers. Security Group, Inc. was ordered to pay a $5 million CMP.
CFPB Settlements Do Include Some Leniency
It should be noted, that despite the unexpected flurry of settlements from the CFPB in the last six weeks, the Bureau does appear to be taking all circumstances into account and affording respondents with some leniency in terms of financial consequences. In all but the Security Group’s settlement, which reads as the most egregious, the CFPB either agreed to accept a lesser amount than originally stated or it chose to impose no CMP or only a nominal one. This likely reflects the philosophy of the current administration.
Bank Risk and Compliance Writer 