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Consumer Protection and the CFPB: What's In Store?

NAGTRI Program Counsel
While the state attorneys general are the leading force in consumer protection, it is necessary to maintain awareness of what the various federal agencies and others may be planning in regard to different priorities and agendas in terms of agency rules and regulations.  Keeping up with this myriad and complex world of government regulation requires persistence, perseverance, and patience. 

How helpful would a crystal ball be when it comes to regulatory plans of federal agencies?  Where is regulation of consumer protection matters going?  What are the federal agencies charged with consumer protection going to address next?  What is the next hot topic? One may need only to gaze at the Unified Agenda and the Regulatory Plan to answer these questions. 

What are the Unified Agenda and Regulatory Plan?   

The Unified Agenda is a semi-annual compilation by the U.S. General Services Administration of the regulatory and deregulatory actions by the approximately 60 cabinet, executive and independent agencies and commissions of the U.S. government. The purpose is to provide reporting of data and activity by these agencies in a uniform manner. Each edition of the agenda, which is compiled in the spring and fall of each year, includes those regulations under development or review by those agencies and commissions. Agencies of Congress are not included.

Regulatory priorities of the agencies are set forth in the Regulatory Plan, a part of the fall edition of the Unified Agenda.  The Plan also gives additional information about significant regulatory actions which are planned or are underway for the coming year.  Each agenda item has a lifespan, from the pre-rule stage through final rule.

This article will focus primarily on what the future may hold, rather than any recent activities, of the Consumer Financial Protection Bureau (CFPB) from examining its Unified Plan for fall 2014. 

Consumer Protection and the CFPB

The CFPB houses the accumulation of much of the federal government’s efforts regarding consumer protection. Established pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank)[1], the CFPB’s agenda highlights a number of matters, including mortgages, prepaid cards, payday loans, and deposit advance products, defining larger participants, debt collection, overdraft practices, and privacy disclosures. 

Mortgages

Much of what the CFPB has done recently has involved mortgage rulemaking made mandatory by Dodd-Frank. This activity will continue as the CFPB works to fully implement these requirements in regard to mortgage market practices. Among the priorities have been provisions under the Home Mortgage Disclosure Act, expanding the scope of information collected and reported concerning housing-related loans and applications.[2] Other priorities include the Truth in Lending Act and Real Estate Settlement Procedures Act integrated disclosure.[3]

Prepaid Cards

The CFPB has made recent proposals concerning protections regarding prepaid financial products such as the general purpose of reloadable prepaid cards as well as digital and mobile wallets.[4]  These proposals seek to expand coverage of regulations implementing the Electronic Fund Transfer Act to prepaid cards in the areas of disclosure, periodic statements and error resolution requirements.  Additionally, the CFPB indicates they may address overdraft services and credit features of these products.

Payday Loans and Deposit Advance Products

What rules might be appropriate for payday loans and other deposit advance products is already under consideration by the CFPB. [5]  These short-term, high-cost products are marketed to meet the immediate needs of consumers. In the case of payday loans, the full amount borrowed is due and payable on the creditor’s next payday. Deposit advances are due as soon as sufficient qualifying electronic deposits are received.[6]  The CFPB has previously conducted research into these products and published their findings and concerns in both a 2013 white paper[7] and a 2014 data point.[8]  Additional research regarding payday borrowers has indicated a number of issues which might warrant action.[9]   Public debate on this topic has been wide-ranging and a recent symposium at George Mason University School of Law included a number of comments on the topic.[10]

The CFPB has indicated that rulemaking in this area may include both aspects of disclosure to the consumer and regulation of various acts or practices of the credit providers.[11]

Defining Larger Participants

A proposed rule amending the definition of larger participants in certain consumer financial product and service markets was proposed in September 2014.  This amendment would define which nonbank lenders by adding a new section covering the automobile financing market.[12]    How that definition would be crafted is not yet known. Possibilities include origination volume, portfolio size, dollar amounts or the number of contracts.[13] The rule would also bring certain automobile leasing activities under the definition of “financial product or service.”

Debt Collection[14]

The CFPB received more than 79,000 comments[15] in 2014 following an advanced notice of proposed rulemaking regarding debt collection.[16]  Debt collection practices have long received the highest number of consumer complaints over any other single industry.

As part of their efforts, the CFPB will survey consumers about their experiences with debt collectors.  In addition, the CFPB hopes to find out what information consumers might find useful about debt collection and how to ensure that information gets to them. As for rule making, consideration is underway as to whether rules are warranted and, if so, what rules would be appropriate.[17]  Among the possible areas of rulemaking are the accuracy of information used by debt collectors, such as whether they are contacting the correct person, the legitimacy of the debt, accuracy of paperwork or data to support the debt claim, contact methods and frequency, false claims made by collectors and issues surrounding credit reporting.[18] 

Overdraft Practices[19]

The CFPB has been studying the overdraft practices of banks and habits of consumers for a number of years in an effort to understand whether the risks faced by consumers as well as whether the costs associated with overdrafts, can be anticipated and avoided.[20]   Banks collect $30 billion each year in overdraft fees and often arguably serve as a loan to consumers.[21]  A June 2013 white paper set out a number of possible consumer protection concerns, including opt-in issues, coverage limits, fee structures, transaction posting order and involuntary account closures.[22]  Following that, a 2014 report looked at the transactions which caused consumers to overdraw their accounts.[23]  Further studies are anticipated, particularly in the areas of how consumers utilize overdraft programs, the information provided to them, alternatives for consumers, how regulation and bank product changes have affected overdraft occurrence, and the costs to financial institutions which provide overdraft services.  

Privacy Disclosures

Finally, the CFPB expects to issue a proposal concerning the notices received by consumers from their financial institutions concerning information sharing practices.  A final rule was released in October 2014 allowing some financial institutions which meet certain requirements to post their annual privacy notices rather than delivering the individually.[24]

For more information or to view the Unified Plan for the CFPB or other agencies, go to http://www.reginfo.gov/public/do/eAgendaMain



[1] Public Law. 111-203, 124 Stat. 1376.

[2] Specific information about this matter may be found on the U.S. General Services Administration, Office of Information and Regulatory Affairs web site at: http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201410&RIN=3170-AA10

[3] Truth in Lending (Regulation Z) and Real Estate Settlement Procedures Act (Regulation X).  Specific information about this matter may be found on the U.S. General Services Administration, Office of Information and Regulatory Affairs web site at: http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201410&RIN=3170-AA48 and http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201410&RIN=3170-AA43

[4] Specific information about this matter may be found on the U.S. General Services Administration, Office of Information and Regulatory Affairs web site at: http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201410&RIN=3170-AA22

[5] Specific information about this matter may be found on the U.S. General Services Administration, Office of Information and Regulatory Affairs web site at: http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201410&RIN=3170-AA40

[6] Payday Loans and Deposit Advance Products, A White Paper of Initial Data Findings, CFPB April 2013.

[7] Id.

[8] CFPB Data Point: Payday Lending March 2014.

[9] See, e.g., Payday Lending in America: Report 2, How Borrowers Choose and Repay Payday Loans, Pew Overview & Key Findings, The Pew Charitable Trusts, February 2013.

[10] Fourth Annual Henry G. Manne Law & Economics Conference, A Symposium on “Consumer Credit and the American Economy”, Nov. 14, 2014, Arlington, VA.

[12] Specific information about this matter may be found on the U.S. General Services Administration, Office of Information and Regulatory Affairs web site at: http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201410&RIN=3170-AA46

[13] James Henry, Captives Likely to Get CFPB Oversight, Automotive News, Sept. 16,2014, http://www.autonews.com/article/20140916/FINANCE_AND_INSURANCE/140919872/captives-likely-to-get-cfpb-oversight

[14] Specific information about this matter may be found on the U.S. General Services Administration, Office of Information and Regulatory Affairs web site at: http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201410&RIN=3170-AA41

[15] CFPB rulemaking blog, supra.

[17] CFPB rulemaking blog, supra.

[19] Specific information about this matter may be found on the U.S. General Services Administration, Office of Information and Regulatory Affairs web site at: http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201410&RIN=3170-AA42

[21] Banks Face Hit From CFPB on $30 Billion in Overdraft Fees, Carter Dougherty, Bloomberg Businessweek, Aug. 1, 2014.

[22] CFPB Study of Overdraft Programs, A white paper of initial data findings, June 2013.

[23] Data Point: Checking account overdraft, CFPB July 2014.

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