The CFPB is asking a Michigan federal district court to hold two companies in contempt for failing to comply with civil investigative demands. While the CFPB has filed numerous petitions to enforce a CID, the contempt motion is reported to represent the first time that the CFPB has sought to have a CID recipient held in contempt for failing to comply.
In February 2017, the federal district court granted the CFPB’s petitions to enforce the CIDs. The CIDs had sought information related to agreements of deed offered by the companies. The companies argued that the CFPB did not have jurisdiction because such agreements are not credit products. The court ruled that unless the CFPB’s jurisdiction was “plainly lacking,” it was required to enforce the CIDs. Since there was a “plausible basis” for finding an agreement for deed to be a credit product, the court held that the CFPB had jurisdiction to issue the CIDs and ordered the companies to comply within 30 days. It thereafter denied the companies’ motion to stay the court’s order enforcing the CIDs pending appeal and gave the companies an additional seven days beyond the 30-day deadline to comply.
Approximately six weeks after the new deadline to comply, the CFPB filed a motion to hold the companies in civil contempt. In the motion, the CFPB asserted that companies had produced nothing until about two weeks after the extended deadline and then provided “only limited, incomplete responses that are qualified by frivolous ‘general objections’ (some of which were previously rejected by the Court)” and had “yet to produce any documents in response to some requests.” The CFPB asked the court to impose a daily monetary fine of $5,000 on each company until they had complied with the court’s order.
In opposing the CFPB’s motion, the companies argued that their actions do not rise to the level of contempt. According to the companies, they “have—and continue to—respond [to the CIDs] in good faith.” A hearing on the CFPB’s contempt motion has been scheduled for August 23.