The Chamber of Commerce of the United States of America (Chamber) has filed an amicus brief opposing the CFPB’s petition filed in the Eastern District of Pennsylvania to enforce its civil investigative demand (CID) issued to J.G. Wentworth, LLC (JGW).  In its brief, the Chamber challenges the CFPB’s attempt through the petition to expand its jurisdiction beyond the limits of Dodd-Frank.

JGW purchases structured settlements and annuities from consumers for lump sums.  In September 2015, the CFPB issued a CID to the company to investigate alleged violations of consumer protection laws.  JGW thereafter filed an administrative petition to set aside the CID as beyond the CFPB’s statutory authority, arguing that its purchase of settlements and annuities was not a consumer financial product or extension of credit subject to the CFPB’s UDAAP authority or the Truth in Lending Act.  The CFPB denied the petition to set aside, asserting that JGW may be providing financial advisory services to consumers in connection with offers to purchase structured settlements or annuities, which would constitute a “consumer financial product or service” subject to Dodd Frank’s UDAAP prohibition.  Alternatively, the CFPB asserted that the purchases might be extensions of credit subject to TILA.  After the denial of its petition to set aside the CID, JGW produced some initial information to the CFPB, but ultimately refused to comply with the CID on the grounds the CFPB lacked jurisdiction over its activities.

In its amicus brief, the Chamber argues that, as an initial matter, TILA cannot be a basis for the CFPB’s jurisdiction because “the statute applies only to extensions of credit, and JGW does not extend credit.”  It then argues that to qualify as a “financial advisory service” under Dodd-Frank, “the advice at issue must itself be an element of what is transacted for.”  It also argues that because the CFPB’s UDAAP authority applies only to acts or practices committed “in connection with a transaction for a consumer financial product or service,” it is only where the consumer has transacted for the advice, such as when financial advice is offered for a fee, that the advice falls within the CFPB’s UDAAP authority.  According to the Chamber, if the CFPB’s authority is not limited in this way, “all marketing statements in connection with every consumer transaction-from refrigerators to home sales to cars-would be regulated by the CFPB.”

In further support of its position, the Chamber argues that enforcement of the CID would result in an expansion of the CFPB’s authority far beyond the limits established by Congress in Dodd-Frank.  The Chamber observes that in Dodd-Frank, Congress excluded certain businesses (such as realtors and retailers of manufactured homes) from the CFPB’s authority except to the extent those businesses engage in offering consumer financial products and services.  It argues that by “interpreting the term ‘financial advisory services’ to capture any discussion of benefits of transactions otherwise outside the CFPB’s authority would deprive those limitations of meaning.  For example, under the CFPB’s theory, it could demand all of the business records of a manufactured home retailer on the theory that it might have provided advice to consumers comparing the relative financial merits of purchasing or renting a home.”

JGW’s challenge could result in another defeat for the CFPB.  The Chamber’s amicus brief references the April 2016 decision of a D.C. federal district court dismissing the CFPB’s petition to enforce a CID issued to the Accrediting Council for Independent Colleges and Schools (ACICS).  The district court ruled that the CFPB exceeded its statutory authority by issuing the CID because the ACICS’s accreditation process for-profit schools, which was the focus of the CID, was not a financial product or service, and had no connection to a for-profit school’s private student lending practices.  The CFPB has filed an appeal with the D.C. Circuit Court of Appeals.