cfpb complaints, compliance, and enforcement: trends and tips
TRANSCRIPT
© 2016 Venable LLP
Wednesday, February 17, 2016
David Morgan
PerformLine
Chief Revenue Officer
415.871.1093
CFPB Complaints, Compliance,and Enforcement: Trends and Tips
Jonathan L. Pompan
Venable LLP
Partner and Co-Chair of CFPB Task Force
202.344.4383
© 2016 Venable LLP
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About
VENABLE is an American Lawyer100 law firm. With more than 600attorneys in nine offices acrossthe country, we are strategicallypositioned to advance our clients’business objectives in the U.S.and abroad. Our clients rely onVenable's proven capabilities inall areas of corporate andbusiness law, complex litigation,intellectual property, andregulatory and governmentaffairs.
© 2016 Venable LLP
• A team of over 30 attorneys who havesubstantial experience with consumer financiallaws.
• We have represented dozens of clients inconnection with CFPB regulatory, examination,and enforcement matters. We counsel andadvise banks, credit unions, credit card issuers,money transmitters, mortgage originators andlenders, small dollar lenders, auto lenders,student loan originators and marketers, creditreporting agencies, consumer credit counselingagencies, debt relief services providers, debtbuyers and collectors, prepaid card providers,and innovative payments providers on allaspects of consumer finance law.
• Our attorneys also have extensive experiencerepresenting consumer financial product andservice providers, and their vendors, before thefederal banking agencies, the FTC, Departmentof Justice, United States Attorneys’ offices,United States Congress, state regulators, andstate Attorneys General.
• Many of our attorneys formerly served asgovernment regulators, including at the CFPB,FTC, banking regulators, and DOJ, and theirexperience enables us to help our clientsunderstand and comply with the evolvingexpectations of the CFPB.
• www.venable.com/cfpb
© 2016 Venable LLP
About PerformLine
• Founded in 2008 and solely focused on marketing compliance
• Team of industry and technology experts
• PerformMatch is the SaaS Compliance Monitoring Platform
• Real-time automated monitoring of marketing content on the weband in contact centers
• Discovering, monitoring, and scoring billions of potentialviolations for clients everyday
© 2016 PerformLine, Inc.
Complying with REGULATIONSover multiple CHANNELS
♯C O M P L I C A T E D♯L A B O R I N T E N S I V E
♯E X P E N S I V E
Market Challenge
© 2016 PerformLine, Inc.
potentialviolationsautomatically
risk with always-on,scalable technology
with real-time data,world-class workflow
& remediation tools
DISCOVER ACT
MONITOR
Solutions for Enterprise Compliance
© 2016 PerformLine, Inc.
Jonathan L. PompanVenable LLPPartner and Co-Chair of CFPB Task [email protected]
David MorganPerformLineChief Revenue [email protected]
Presenting to you today
CFPB Consumer Complaints
© 2016 PerformLine, Inc.
CFPB Consumer Complaint Database
• July 2011: Began receiving consumer complaints
• June 2012: Began publishing select information from
consumer complaints online
• January 2016: Database is a collection of over 505,000
complaints, sent to nearly 3,000 companies for response
• Complaints are published after the company responds or
after 15 days (whichever comes first)
© 2016 PerformLine, Inc.
Consumer Complaints on the Rise
© 2016 PerformLine, Inc.
Complaints vs Probability of Being Fined
100-2,000complaints
2,000 - 10Kcomplaints
10,000+complaints
Probabilityof Being
Fined7% 55% 60%
Avg. Fine $48 Million $125 Million $758 Million
Consumer Complaint Scale
© 2016 PerformLine, Inc.
Risk Signals For Companies
© 2016 PerformLine, Inc.
Key Takeaways
If the CFPB has received over 2,000 complaints about your company, theprobability of your company being fined could be as high as 55%.
If your company has over 10,000+ complaints in the CFPB database, yourcompany has a chance of facing an average fine of $758 million.
Proactively addressing potentially misleading or deceptive marketing is a criticalcomponent of protecting your company.
Abiding by CFPB guidance and monitoring the consumer complaint database iskey to staying on top of consumer issues (great ref doc: Bulletin on“Responsible Business Conduct”).
© 2016 PerformLine, Inc.
© 2016 Venable LLP
Compliance and Enforcement:Trends and Tips
CFPB Aggressive Use of UDAAP
How to Decode UDAAP
– UDAAP in Enforcement• Dozens of Consent Orders
– UDAAP in SupervisionExams
– UDAAP in Rulemaking• Debt Collection
• Small Dollar Lending
– Bulletins
© 2016 Venable LLP
© 2016 Venable LLP
• Government agencies are targeting abroad set of business practices, from therepresentations made to consumersabout the products, services, andmerchants they are being connected toand how their data is being used, to thecollection and security of personalinformation, and even whether theproducts or services ultimately sold toconsumers comply with applicable (andsome cases potentially inapplicable)laws.
Lead Generation and Advertising
• The “squeeze” is being felt by allparticipants—publishers, aggregators,and buyers—and, notably, the lines oflegal responsibility and accountabilitycontinue to blur. All told, the viability ofonline lead generation is at stake.
• FTC Enforcement and the FTC Workshopon Lead Generation
© 2016 Venable LLP
• The CFPB (teaming with the FTC) has taken aimat first-party and third-party debt collectionactivities, including in enforcement settlementswith lenders and collectors. In November, federal,state, and local regulators and enforcementagencies announced a national initiative targetingdebt collectors, branded Operation CollectionProtection.
• Operation Collection Protection complementsrecent CFPB enforcement, supervisory,and rulemaking efforts focused on the debtcollection industry, including first-party creditorsand billing services, and on the intersectionof data furnishing and debt collection. In addition,the CFPB continues to work on developingproposed rules for debt collection followingpublication of its advanced notice of proposedrulemaking in November 2013.
• What’s next?
– Additional supervisory exams andenforcement focused on debt collection.
• Reasonable basis to collect and sue
• Credit Furnishing and Disputes
• Disclosures concerning time-barred debt
• More
– Debt Collection NPRM
• First Party Debt Collection, Third Party, ServiceProviders
– Continued coordination with state regulatorsand AGs
Debt Collection and Debt Buying
© 2016 Venable LLP
• Recent CFPB and FTC activity reflectsan increase in scrutiny of companies thatsupply or “furnish” information toconsumer reporting agencies (CRAs) asrequired by the Fair Credit Reporting Act(FCRA).
• Data furnishers, including merchants,debt collectors, and lenders, can reducesupervision and enforcement risk byavoiding the common mistakes the FTCand CFPB have identified in their recentenforcement announcements.
• In November, Venable attorneysconducted a webinar, “Minimizing Legaland Compliance Risk for CreditFurnishers,” that focused on compliancetips and best practices.
Data Furnishing
© 2016 Venable LLP
• The CFPB recently issued guidance onhow companies obtain consumerauthorization for recurring auto debits.Although the CFPB does not haveauthority over all companies with regardto payments, the guidance providedreflects compliance issues relating topreauthorized electronic funds transfersin CFPB examinations, and is also anarea in which the FTC has jurisdiction.
Recurring Payments
© 2016 Venable LLP
• The CFPB has actively pursued not onlyactive participants in alleged violations ofconsumer protection law, but alsocompanies that provide services to thecompanies, including those involved inmarketing the services.
• The CFPB has been using its“substantial assistance” authority, whichmakes it possible for it to attack anyperson it believes knowingly orrecklessly provided substantialassistance to actors that fall under theCFPB’s jurisdiction.
Sweeping Enforcement Actionsw/ Service Provider Liability
© 2016 Venable LLP
• Increased scrutiny of student lendingpractices, and investigations intoadvertising and marketing of privatestudent loans.
• Over the past several years, the CFPBand the U.S. Department of Education(DOE) have taken a number of steps toincrease regulatory requirements forschools and financial institutions thatoffer financial products and services tostudents, such as credit, debit, andprepaid cards, as well specific actionsrelated to student loans,including servicing guidance.
• Lessons for all consumer financialproduct and service providers, as well asvendors and advertisers.
Financial Services For Students
© 2016 Venable LLP
We know the symptoms. What should we do?
Costs of Operationalizingand Maintenance
Complexity
Ongoing Policies,Procedures, and Controls
Streamline Procedures
Facilitate Control,Improvements, andOpportunities
Identify Risk Areas
Demonstrate Compliance
Automate impactassessment
Ch
alle
nge
s
Op
po
rtun
ities
© 2016 Venable LLP
Questions and Answers
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Learn More About your Company’s Risk Signalsfrom the
CFPB Consumer Complaint Database
David Morgan
415-871-1093
http://lp.performline.com/cfpb-risk-signal-report
Contact us:
www.performline.com
© 2016 Venable LLP
To view Venable’s index of articles and PowerPoint presentations on
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