Director Cordray is reported to have defended the CFPB’s authority to investigate a college accrediting organization at a recent Politico event.
On October 8, 2015, the CFPB issued a decision and order denying the petition of the Accrediting Council for Independent Colleges and Schools (ACICS) to modify or set aside the CID issued by the CFPB. Among the objections to the CID raised by ACICS were that the Department of Education is its sole regulator and that it was not subject to the CFPB’s enforcement jurisdiction as a “covered person,” “service provider,” or “person who knowingly or recklessly provides substantial assistance to a covered person or service provider.”
On October 23, Senator Lamar Alexander and Representative John Kline sent a letter to Director Cordray requesting that he “immediately rescind the issuance of a civil investigative demand to [ACICS] and halt any other planned investigatory actions regarding accreditors or the accreditation of institutions of higher education.” (Mssrs. Alexander and Kline are, respectively, the Chairs of the Senate Committee on Health, Education, Labor and Pensions and the House Committee on Education and the Workforce.) In their letter, the lawmakers asserted that the CFPB’s issuance of the CID to ACICS represents an “unprecedented overreach” by the CFPB that “raises serious concerns regarding jurisdiction.”
In defending the CID, Director Cordray is reported to have said that the CFPB’s “authority is over those who provide financial products or services, or provide material, substantial assistance to those who do” and that “if an accrediting agency is facilitating for-profit colleges’ misleading consumers, treating them unfairly and deceptively, then that’s something that we should look at.”
We have previously commented on the CFPB’s aggressive approach to asserting its jurisdiction. In August 2015, Ballard Spahr attorneys conducted a webinar: “Pushing the Envelope: Are There Limits to the CFPB’s Jurisdiction?” in which we discussed the CFPB’s continuing “jurisdiction creep” and explored the limits of the CFPB’s jurisdiction.