CFPB Enforcement Action against Debt-Settlement Payment Processor
On August 25th, the CFPB entered a proposed consent order with a large, national debt-settlement payment processor. The associated complaint filed by the CFPB alleges that the payment processor violated the Telemarketing Sales Rule (TSR) by enabling debt-settlement companies to charge consumers illegal upfront fees. These debt-settlement companies generally offer to reduce or eliminate a consumer's debt by negotiating settlements with creditors. However, the TSR prohibits debt-settlement companies from charging consumers advance fees before settling any of their debts. According to the complaint, the payment processor processed millions of dollars of these illegal advance fees on behalf of debt relief companies. The proposed consent order would require the company and its owners to stop processing such illegal payments for debt settlement companies, pay $6 million in consumer relief, and pay a $1 million civil money penalty.
CFPB Publishes Report Promoting Financial Wellness in the Workplace
On August 26th, the CFPB published a report that encourages employers to educate their employees about "financial wellness." CFPB Director Richard Cordray said in a statement that "[a] financially capable workforce is a more satisfied and engaged workforce that is also more productive." The report provides specific examples of how some employers are already helping consumers develop financial skills. For example, the CFPB is encouraging employers to implement financial education programs when employees first join a company. The report cites studies showing that employees are more focused at such times on making important financial decisions regarding such issues as tax withholding, retirement savings, and employer-offered health insurance.
CFPB Announces New Senior Management and Advisory Board and Council Members
On August 28th, the CFPB announced the addition of several new leaders within the CFPB:
- Patricia McClung was added as Assistant Director for Mortgage Markets. Prior to joining the CFPB, Ms. McClung worked at Federal Housing Administration as a senior housing policy advisor.
- Janneke Ratcliffe was added as Assistant Director for Financial Education. Prior to joining the CFPB, Ms. Ratcliffe served as Executive Director at the Center for Community Capital, at the University of North Carolina at Chapel Hill.
- Will Wade-Gery was added as the Assistant Director for Card and Payments Markets. Mr. Wade-Gery had already been serving in the same position as the acting Assistant Director.
The CFPB also announced the appointment of new consumer finance experts from outside the federal government to the CFPB's Consumer Advisory Board, Community Bank Advisory Council and Credit Union Advisory Council. The Consumer Advisory Board is charged with advising and consulting the CFPB's director on a variety of consumer financial issues. The two advisory councils also advise and consult the CFPB on consumer financial issues related specifically to community banks and credit unions. The new members to the Board will serve three-year terms and new members to the advisory councils will serve two-year terms.
CFPB Enters MOU with Federal Agencies Regarding Benefits for Servicemembers
On August 26th, the CFPB entered a Memorandum of Understanding (MOU) with the Department of Defense, Department of Education, and the Department of Veterans Affairs. The agreement among the agencies outlines a strategy to coordinate their enforcement and compliance work with respect to federal education benefits available to servicemembers, veterans, spouses and other family members attending college. Among other things, the MOU requires the agencies to share complaints about schools and to alert each other about suspected instances of fraud, deception or other misleading practices.
The MOU is a part of a larger effort by the agencies to prevent abusive and deceptive recruiting practices by colleges. In January 2014, the agencies released an online student complaint system where servicemembers, veterans, and their families can report negative experiences at institutions administering the Post-9/11 GI Bill, DoD Military Tuition Assistance, and other military-related education benefit programs. Already over 2,000 complaints have been received. The complaints are forwarded to schools and also shared with other law enforcement agencies.
CFPB Auto Finance Field Hearing
The CFPB will hold a field hearing on auto finance on Thursday, September 18th at 11 a.m. EDT in Indianapolis, Indiana. According to the CFPB's announcement, the hearing will feature remarks from Director Richard Cordray, as well as testimony from consumer groups, industry representatives and members of the public. In the past, the CFPB has used its field hearings as a forum to announce new initiatives.