Litigation Against the CFPB: An Update on Recent Enforcement Actions

Since its formation in 2011, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) has racked up some impressive settlements. Charged with enforcing 18 different consumer protection statutes and armed with expansive new UDAAP power under Title X of the Dodd Frank Wall Street Reform and Consumer Protection Act (the “Dodd Frank Act”), the Bureau has launched investigations and brought enforcement actions across many areas, such as credit card add-on products, student loans and loan servicing, mortgages and mortgage servicing, debt collection, and consumer credit reporting.Between penalties and consumer redress, billions of dollars have been extracted from the financial sector.

This reflects two related factors - both a young agency’s willingness to assert its impressive enforcement authority, and companies’ reluctance to litigate these claims. Faced with massive exposure and pressure from prudential regulators, nearly 80% of public companies that come under the scrutiny of the CFPB choose to settle rather than litigate the merits of these claims.

In this presentation, Ryan Scarborough, a Williams & Connolly LLP partner who regularly handles financial services litigation brought by the Bureau and prudential bank regulators, and Rachel Rodman, a Williams & Connolly LLP counsel who formerly worked as an enforcement attorney at the CFPB, will share their observations from recent CFPB investigations and enforcement actions. They will discuss the price to companies of a reluctance to litigate, and highlight recent examples where litigation - particularly when there is reason to believe that the Bureau has overreached - dramatically improved outcomes compared to settlement. 

Learning Objectives:

1. Review the weapons in the Bureau’s enforcement arsenal, including its use of supervisory examinations as a netting mechanism, its aggressive use of civil investigative demands, and far-reaching powers to pursue damages, restitution, and civil money penalties
2. Discuss the elements of the traditional CFPB settlement paradigm and factors that influence the decision whether to settle or litigate
3. Update participants on recent CFPB enforcement actions and overall trends
4. Understand how some companies in recent enforcement actions have used litigation to achieve far better outcomes compared to settlement