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Compliance with Consumer Finance Protection Bureau Guidelines (CFPB)

Compliance with Consumer Finance Protection Bureau Guidelines (CFPB)

The Consumer Financial Protection Bureau (CFPB) has sweeping oversight and enforcement authority over the consumer finance industry. Above and beyond retail mortgage lending, their authority extends to all varieties of financial transactions. The Bureau also enforces companies’ federal consumer data protection obligations rather energetically.

Overview of CFPB

The Consumer Financial Protection Bureau’s (CFPB) was established in 2010 to oversee the consumer financial services industry. Its scope of authority was expanded significantly over the last ten years. Although the CFPB’s original mandate was to enforce the responsibilities of corporations under the Dodd-Frank Act in the aftermath of the 2008 financial crisis, at present, the CFPB enforces a range of federal laws and regulations governing nearly every aspect of consumer finance transactions.

In today’s world, this means that many different types of companies fall within the CFPB’s enforcement jurisdiction. More than ever, entities ranging from healthcare providers to retailers are being targeted with civil investigative demands (CIDs) and staring down the potential for substantial liability due to alleged Dodd-Frank Act, Truth in Lending Act, and other statutory violations. So as to avoid liability in the event of an investigation, every organization falling within the CFPB’s enforcement jurisdiction must commit adequate resources and attention to consumer finance compliance.

Industries and Transactions Coming Under CFPB Compliance

Are you aware whether your business or practice is subject to CFPB compliance? At the moment, the CFPB is focusing its supervision and examination efforts on these industries, transactions, and consumer finance practices:

George FernandezGeorge Fernandez
14:16 30 Apr 24
Excellent 10 out of 10, Helped resolve my case. Jeremy explained everything and made everything easy to understand.
21:33 24 Apr 24
If you are looking for a lawyer that listens, is aggressive where needed, and holds his word above all else, Todd is the best pick. I had hired multiple attorneys prior to hiring the Spodek Group for a white collar case. The first thing that stood out to me was the cost, as anyone going through the process and dealing with the system, money was tight at that time - especially after hiring and firing multiple lawyers. The cost was not as high as others which was definitely a plus. Todd's intake process was also unlike other attorneys. He took the time to actually listen. He cared. He was trying to put himself in my shoes while I was explaining the situation to him and he really took the time to understand the whole situation. Other lawyers will give you 15 mins and send you a retainer agreement. Not Todd, I think he spent almost two hours with me as I was explaining everything.Not only was he great during the onboarding process, he was supportive and very informative through the entire plea process and eventually sentencing. After hiring him, I asked if I should hire a prison consultant, he told me to save my money as he would do everything they would. He was right and held up to his word. Later on I would hear from others that went with the prison consultants that they were a waste of money - I am glad I listened to Todd!When it came time for sentencing, two days prior to sentencing, the prosecutor tried increasing my proposed prison time by almost double - apparently a normal move. Todd and his team worked with me non-stop through the weekend prior to sentencing to ensure that I was not given additional prison time. Again, he took the time to listen and came up with a strategy to explain the case with great detail.Unfortunately, I did plead guilty as that was my best option. Todd and his whole team wrote up nearly 300 pages of a summary of what happened and why I should not be given prison time. If I breakdown the amount I spent with Todd versus the amount of work that I saw being done, I am shocked I was not charged four times as much. The other benefit was, a lot of criminal defense lawyers were just a single attorney with a paralegal or two. Todd had a team of people that I dealt with (5-7 people that I interacted with), but he was ALWAYS accessible. It would never take him more than an hour to reply unless he was in court.I was sentenced to prison and I was emotionally distraught. Todd and his team did whatever they could even after sentencing to make sure I was alright. He personally stayed in touch with my family to ensure I was doing alright and offered support to them. Most lawyers would consider the job complete at sentencing, not Todd.After prison, Todd still spent time with me to make sure I was on the right track and avoiding any potential risks in the future. He has also been giving advice on how to navigate probation etc and has not been looking at the clock for billing.Although I wish I had never been arrested in the first place, I am glad I had Todd and his team in my corner. Without them I likely would have had to spend a lot more time in prison than I did.Thank you, Todd, and the entire Spodek Law team, for helping turn what was a nightmare into a manageable situation!
Yelva Saint-PreuxYelva Saint-Preux
19:26 19 Apr 24
I am immensely grateful to the entire team at Spodek Law Group for their unwavering dedication and exceptional expertise throughout my case. From our initial consultation to the final resolution, their professionalism and tireless advocacy made all the difference. Their strategic approach and attention to detail instilled confidence in me every step of the way.Thanks to their hard work and commitment, we achieved a truly favorable outcome that exceeded my expectations. Not only did they navigate the complexities of my case with precision, but they also provided invaluable support and guidance during what was undoubtedly a challenging time. I cannot recommend Spodek Law Group highly enough, especially attorneys Todd Spodek and Claire Banks; they are beacons of excellence in the legal profession.YSP.
Katherine SunKatherine Sun
18:08 18 Apr 24
my lawyer is Alex Zhik. Efficient, patient and professional
Nun yaNun ya
17:48 18 Apr 24
Todd, Ralph and Alex are amazing. Helped my husband get from a double digit number with multiple charges to a single digit, by the time I blink he will be out. They very professional and help with all your needs. They dealt with my anxiety and worry very well and they understand that your family member needs to get home as soon as possible.
Keisha ParrisKeisha Parris
20:45 15 Mar 24
Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.
Taïko BeautyTaïko Beauty
16:26 15 Mar 24
I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence.Thank you team!
K MarK Mar
01:37 25 Jan 24
I recently had Spodek Law Group represent me for a legal matter in NYC and I am thoroughly impressed with their services.Alex Zhik secured the best possible outcome for my case.It was a seamless journey from the initial consultation to the resolution of my legal matter. From the moment I spoke to Todd about my case, his enthusiasm to help was evident, setting a positive tone for the entire experience. The efficiency and professionalism displayed by the team is commendable.A particularly noteworthy aspect of their service is their user-friendly portal to upload your documents/evidence. This not only simplified the process, but showcases their commitment to streamline the client experience.Lastly, in an industry where legal fees can often be a concern, I found their pricing to be very reasonable, making needing legal assistance feel accessible and stress-free.I am grateful for their support and wouldn't hesitate to turn to them again in the future.
  • Consumer Reporting
  • Automotive Finance
  • Management of Credit Card Account
  • Debt Collection
  • Education Loans
  • Prepaid Accounts
  • Origination and Servicing of Mortgage
  • Remittance Transfers
  • Short-Term, Small-Dollar Lending

When perusing this list, it is critical to bear in mind that the CFPB’s oversight is not limited to entities operating particularly within the consumer finance industry. For instance, with regard to debt collection, prepaid accounts, and remittance transfers, pretty much all types of service providers – from healthcare providers to real estate agencies – could possibly be subject to supervision and examination by the CFPB.

How You Should Develop and Maintain a Sound Compliance Management System (CMS)

In the event that your business or practice is subject to CFPB compliance, then what will it take to maintain compliance? The CFPB calls consumer finance compliance programs “Compliance Management Systems” (CMS). The CFPB Examination Procedures for Compliance Management Reviews has a clause that states:

“To maintain legal compliance, an institution must develop and maintain a sound compliance management system (CMS) that is integrated into the overall framework for product design, delivery, and administration across their entire product and service lifecycle. Ultimately, compliance should be part of the day-to-day responsibilities of management and the employees of a supervised entity; issues should be self-identified; and corrective action should be initiated by the entity.”

The Bureau’s procedures manual continues by stating that companies must “manage” relationships with third-party service providers to make certain that their compliance with all applicable federal laws and regulations. Said differently, delegating responsibility for certain situations, such as data security, does not protect companies from liability. It then details five specific details of compliance that will be scrutinized during examinations of companies’ compliance management systems, and it states that an effective CMS must consist of “two interdependent control components.” The five foundational aspects of CFPB compliance are:

  1. The company’s compliance obligations being identified;
  2. Effective communication of the company’s compliance obligations to its staff members;
  3. Continuing the responsibility for meeting the company’s compliance obligations and keeping to its policies and procedures is adequately “incorporated into business processes;”
  4. Consistently assessing operations to ensure compliance on a continual basis; and,
  5. Taking corrective action as needed.

Two control components of an effective CMS that are interdependent are:

  1. Oversight by the board and management; and,
  2. A compliance program that includes policies and procedures, staff training, monitoring and/or auditing, and response to consumer complaints.

Pursuant to the CFPB, “[w]hen the two interdependent control components are strong and well-coordinated, an institution should be successful at managing its compliance responsibilities and risks.”

The Federal Statutes Included in the CFPB’s Enforcement Jurisdiction

For the purpose of developing an effective compliance program and adopting an overall CMS that has the ability to withstand CFPB scrutiny, a company needs to have a comprehensive understanding of their statutory and regulatory obligations. As noted above, the CFPB’s enforcement oversight now extends quite a way beyond the consumer fraud and abuse provisions of the Dodd-Frank Act. When weighing their consumer finance compliance obligations, businesses and practices also need to be assessed as to whether their financial transaction and electronic recordkeeping practices bear compliance implications under statutes including:

Employing CFPB Bring-to-Market Programs

An announcement in September 2019 by the CFPB publicized the adoption of three new policies designed to “promote innovation and facilitate compliance” in connection with bringing new consumer finance products and services to market. Critically, each of these policies – the No-Action Letter (NAL) Policy, Trial Disclosure Program (TDP) Policy, and Compliance Assistance Sandbox (CAS) Policy – necessitates proactive efforts for the purpose of securing protection from CFPB enforcement. When employed appropriately, nevertheless, these policies can insulate entities from liability for statutory and regulatory violations if it happens that a proposed product, service, or market strategy is not completely compliant. As detailed by the CFPB:

  • No-Action Letter (NAL) Policy – “NALs provide increased regulatory certainty through a statement that the Bureau will not bring a supervisory or enforcement action against a company for providing a product or service under certain facts and circumstances. The new NAL Policy improves on the Bureau’s 2016 NAL Policy by having, among other things, a more streamlined review process focusing on the consumer benefits and risks of the product or service in question.”
  • Trial Disclosure Program (TDP) Policy – “Under the new TDP Policy, entities seeking to improve consumer disclosures may conduct in-market testing of alternative disclosures for a limited time upon permission by the [CFPB].”
  • Compliance Assistance Sandbox (CAS) Policy – “The CAS Policy enables testing of a financial product or service where there is regulatory uncertainty. After the [CFPB] evaluates the product or service for compliance with relevant law, an approved applicant that complies in good faith with the terms of the approval will have a ‘safe harbor’ from liability for specified conduct during the testing period. Approvals under the CAS Policy will provide protection from liability under the Truth in Lending Act, the Electronic Fund Transfer Act, or the Equal Credit Opportunity Act.”

Comprehensive Legal Representation for All Aspects of Consumer Finance Compliance

At Spodek Law Group, the federal compliance attorneys on our team represent corporations, professional practices, and other organizations with respect to all parts of consumer finance compliance. From developing compliance programs and implementing effective compliance management systems to looking for protection for a particular initiative under the CFPB’s new NAL, TDP, or CAS policy, our attorneys can assist you in avoiding unwanted scrutiny from the CFPB. With a great deal of experience in compliance and in CFPB CID response, we are capable of offering strategic and proactive representation on the basis of deep insights and a deep comprehension of federal law enforcement policies, procedures, and priorities.

Our compliance counsel works closely with our clients’ executives, managers, in-house counsel, and other identified stakeholders to pinpoint their needs and come up with comprehensive and custom-tailored compliance schemes. We also connect with the CFPB on our clients’ behalf when needed, and our lawyers have extensive experience working with other federal authorities with regard to compliance and enforcement also. Regardless of the extent of your company’s needs, and the present status of your company’s consumer compliance efforts notwithstanding, we are able to ensure that your company is on point. We will position you to avoid substantial penalties in the event of a whistleblower complaint or CFPB-initiated enforcement proceeding.

As consumer finance compliance attorneys, the services we provide our clients also cover:

  • Identifying compliance obligations inside the realm of consumer finance, data privacy, and overall corporate compliance;
  • Identification of further industry-specific compliance requirements;
  • Staff discipline and related matters related to compliance breaches;
  • Developing and implementing of comprehensive compliance policies and procedures, which includes compliance program dissemination and training;
  • Compliance monitoring, auditing, and event response in internal operations;
  • Requests for NALs, safe-harbor protection, and other CFPB policy protections;
  • Guidance with regards to proposed products, services, and market initiatives with possible consumer finance compliance implications; and,
  • Continuous advice and representation regarding CFPB compliance, including advice with regards to changes in CFPB policies and procedures, and federal consumer finance regulations.

To ask you questions about your business’s or practice’s consumer finance compliance needs, you are encouraged to reach out to us. Get in touch with us today to set up a complementary needs assessment with one of our expert federal compliance attorneys.

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