What’s All the Fuss About Anyway?

On any given day, I get a flurry of e-mails from various publications, associations and news sources that provide me with updates on changes at the state level and the goings on at the federal government and in Congress. Sorting through all of this information is much like trying to drink from a fire hose, but it’s something you just have to do if you want to keep up with all of the legal and regulatory changes that are happening on a daily basis. On occasion, I’ll run across an article that particularly catches my eye as I either hadn’t seen it reported elsewhere or it wasn’t being talked about much in the press.

It was reported the other day that U.S. House Financial Services Committee Chair Maxine Waters (D-Calif.) and Subcommittee on Oversight and Investigations Chair Al Green (D-Texas) sent a letter to CFPB Director Kathy Kraninger requesting documents on the CFPB’s settlements with three companies this year that have not resulted in fines or restitution. The three settlements include: Sterling Jewelers Inc., Enova International, Inc. and NDG Financial Corp.

Sterling Jewelers Inc. was accused by the CFPB of enrolling credit card customers into a payment protection plan without customers’ consent. They settled by agreeing to pay a $10 million penalty, but the settlement didn’t include a refund for consumers impacted by the company’s alleged actions. Enova International, Inc. was accused by the CFPB of debiting consumers’ bank accounts without their authorization. They too agreed to settle and pay a $3.2 million penalty, but again the settlement didn’t include a refund for affected consumers. Finally, NDG Financial Corp. was accused by the CFPB of collecting on payday loans allegedly made in violation of state law. The settlement did not require NDG to provide any relief to effected consumers.

Waters’ and Green’s letter requested the CFPB provide any communications between the Bureau and others, including the accused companies listed above, related to restitution to impacted consumers. The letter also asks for any and all drafts of the proposed consent order, all meeting minutes, and all memorandum in draft or final form. The letter further states that the practice of not requiring the payment of redress to consumers harmed by the “illegal conduct” stands in stark contrast to the Bureau’s practice under the leadership of former Director Cordray when the Bureau sought relief for those consumers harmed by unlawful practices (and reportedly recovered nearly $12 billion in relief for harmed consumers).

So, what’s all this fuss about anyway? You may remember that Rep. Waters made it clear late last year that if she were to become the Chair of the House Financial Services Committee, she would focus her attention on the CFPB. She also introduced a bill in the House that would require the CFPB to meet its statutory purpose and protect consumers. Well, now that she is Chair of the Financial Services Committee, she certainly appears to be keeping true to her word. Like a dog with a bone, she appears to be laser focused on the CFPB.

It’s unclear as of this writing if Director Kraninger will take a page out of former Acting Director Mulvaney’s playbook and stonewall the committee by not responding, if she’ll respond with the requested documentation, or if this type of continued pressure from Rep. Waters will influence her and the CFPB’s enforcement decisions and settlements. This type of fuss and pressures have a way of causing attitudes and actions to change. One thing is clear however, we can expect Rep. Waters to keep the heat and pressure on Director Kraninger and the Bureau. Also, don’t expect that heat and pressure to end there; now that Senator Warren has announced her candidacy for President, I fully expect to be hearing from her on the CFPB’s actions or lack thereof.

The NAF Legal Committee will continue to keep you informed about legal and regulatory changes of interest to the sub-prime auto finance industry.

Eric Johnson
Eric L. Johnson is a partner in the Oklahoma City, OK office of Hudson Cook, LLP. Eric can be reached at (405) 602-3812 or [email protected] This article is provided for informational purposes and is not intended nor should it be taken as legal advice. ©Copyright 2018 Eric L. Johnson. All rights reserved. Single print publication rights National Automotive Finance Association.