As he has done in prior years, Director Cordray spoke earlier this week to the National Association of Attorneys General. His prepared remarks focused on the familiar theme of “the four Ds” that create obstacles for consumers in the financial services marketplace–deceptive marketing, debt traps, dead ends, and discrimination.
Director Cordray’s remarks included the following noteworthy comments on the “Four Ds”:
- Deceptive marketing: Director Cordray stated that “one of the most objectionable experiences we have had to date has been with law firms that purport to be helping people resolve their debts, but really are misusing their law license to defraud consumers.” He indicated that these cases “have provided some of our most protracted litigation…including sanctions motions we had to file in some instances and criminal referrals we had to make in others.”
- Debt traps: With regard to payday and other “short-term, high-cost” loans, Director Cordray stated that the CFPB is “in the latter stages of considering how we can best formulate new rules to reform the market.” His comments indicate that the CFPB’s proposal is likely to reflect state approaches to regulating payday loans. He stated that the CFPB is “going about this rulemaking with the clear knowledge that states were regulating payday lending before the Bureau even existed. That extensive and varied experience has shed light on the problems in this market and opportunities to craft measures that will benefit consumers.”
- Dead ends: Labeling debt collection a “key market where we find many dead ends,” Director Cordray stated that the CFPB is “hard at work analyzing and preparing the details of proposed policy measures, which could lead to the most significant changes in federal law in this area in almost forty years.” He also indicated that the CFPB has been seeking input from state AGS and the FTC.
- Discrimination: Director Cordray indicated that the CFPB “has focused significant resources on rooting out discrimination in indirect auto lending” and that settlements have resulted in supervised entities “collectively paying out approximately $136 million to provide redress for up to 425,000 consumers who were discriminated against on the basis of race.” (We note that based on supervisory information previously provided by the CFPB, approximately $56 million of the $136 million in redress resulted from non-public supervisory resolutions.)
Also noteworthy were Director Cordray’s statements that (1) the CFPB’s publicly announced enforcement actions “so far have resulted in $5.3 billion in relief to 15 million consumers and more than $200 million in civil money penalties,” and (2) 22 state AGS and 28 state banking regulators have signed up to access the CFPB portal that provides “real time access” to complaints filed with the CFPB.