US Chamber, Trade Groups Suit Claims Consumer Financial Protection Bureau Exceeded Jurisdiction | Awareness | So Good News

The US Chamber of Commerce and six trade groups filed a lawsuit in the US District Court for the Eastern District of Texas against the Consumer Financial Protection Bureau (CFPB) claiming that the Bureau is exceeding the powers granted by Congress.

The CFPB is an independent agency within the Federal Reserve. It has the power to regulate the financial sector and to enact, monitor and ensure compliance. Its main function is to protect consumers. The CFPB publishes the Supervision and Inspection Manual, which is a guide for supervising and reviewing regulatory agencies regarding their compliance with consumer protection laws.

A case

The lawsuit was filed as a result of the CFPB’s changes to the Unfair, Deceptive, Abusive or Practices (UDAAP) section of the Code. This section of the Manual has been amended to provide the CFPB with jurisdiction over what constitutes unfair discrimination.

The CFPB’s objections are threefold. The plaintiffs argue that the revised Manual does not provide guidance on what constitutes unfair discrimination or disparate outcomes. In particular, the Guide says it fails to recognize protected groups or that would not constitute discrimination. Due to the vagueness of the updated Manual, regulatory bodies do not have clear guidelines on the products or services that can be offered to consumers.

Second, as amended, the Rule gives the CFPB the authority to review agencies that it suspects are discriminatory. The plaintiffs argue that this exceeds the statutory powers granted to the CFPB by Congress in the Dodd-Frank Act.

Finally, in preparing the Manual, the plaintiffs allege that the CFPB failed to comply with the notice-and-comment requirements of the Administrative Procedure Act (APA). Under the APA, before the law changes, the CFBP must provide notice to the public and allow time for public comment. The critics say that the changes to the Book were too big and did not meet the requirements of information and comments.

It is the opinion of the petitioners that if it is not taken care of, the consumers will suffer because of this change. He says that regulated institutions are no longer able to offer products that consumers benefit from and enjoy, such as interest-free accounts, which are often offered to regular people with large amounts of money and account balances.

The Takeaway

Although the litigation process will take time to materialize, it is important that regulated entities and other financial stakeholders become aware of the CFPB’s mandate and current philosophy. It remains an important task for regulated entities to ensure that their compliance policies are consistent with the requirements of major regulators, such as the CFPB. In order to achieve this, state-run organizations need to review their operations and practices with the aim of reducing their risk in relation to issues such as unfair discrimination and its consequences.

How we can help

Holland & Knight’s Consumer Protection and Compliance Team includes strong CFPB and Federal Trade Commission practices, with experienced attorneys recognized as thought leaders in the industry. The firm has represented many companies and individuals in federal and state investigations of commercial transactions, marketing practices, privacy and data protection, consumer credit, telemarketing and debt collection, saving clients from major financial losses, public oversight, and restructuring. major business operations.

For more information or questions about the CFPB’s changes to the UDAAP section of this manual that may be relevant to you or your company, contact the authors.

The content of this warning is for the education and information of our readers. It is not intended to be, and should not be used as, the only source of information for investigating and solving a legal problem, and should not be substituted for legal advice, which relies on fact-finding. Also, each state’s laws are different and are constantly changing. This information is not intended to be produced, and its receipt does not create an attorney-client relationship. If you have any questions about a particular issue, we encourage you to consult with the authors of this publication, a representative of Holland & Knight or other qualified legal counsel.