This past January, the CFPB filed a lawsuit against TCF National Bank in Minnesota federal district court that alleged that the bank, in connection with offering overdraft services, violated the Consumer Financial Protection Act’s UDAAP prohibition and Regulation E (which implements the Electronic Funds Transfer Act).  Earlier this month, the district court granted in part TCF’s motion to dismiss the CFPB’s amended complaint and dismissed with prejudice the CFPB’s Regulation E claims.  This opinion represents a serious setback for the CFPB (1) specifically in connection with other similar overdraft protection cases in which the CFPB has alleged that a bank’s opt-in procedure violated Regulation E, and (2) generally in connection with a wide variety of cases in which the CFPB is seeking to recover damages and civil money penalties for alleged CFPA violaltions that predate July 21, 2011.

Although it was undisputed that TCF had provided the opt-in notice required by Regulation E, the CFPB alleged that TCF engaged in abusive and deceptive practices in connection with enrolling new customers in overdraft services and that it did not comply with the Regulation E requirements to provide a “reasonable opportunity” for customers to consent to overdraft services and to obtain the customer’s affirmative consent.

The court was unwilling to dismiss the CFPB’s UDAAP claims because it could not conclude that “the Bureau failed to plausibly allege abusive or deceptive conduct simply because the required notice was provided at some point during the account-opening process.”  However, the court would not allow the CFPB to assert UDAAP claims arising before July 21, 2011 (the CFPA’s effective date) using “a type of continuing-violation theory.”  The court observed that “accepting the Bureau’s argument theoretically could render unlawful every account opening ever conducted by TCF, since some of them occurred after the CFPA’s effective date.”

In dismissing the CFPB’s Regulation E claims, the court rejected the CFPB’s attempt to transform conduct that allegedly violated the CFPA into Regulation E violations.  According to the court, while the CFPA broadly attaches to abusive or deceptive practices, “Regulation E, on the other hand, specifies with almost surgical precision the information banks must convey to consumers in connection with overdraft services—a description of the services, the right to opt-in (or not) and so on—and the ways in which they may obtain consumers’ consent.”

The court determined that Regulation E’s “reasonable opportunity” requirement “concerns only the manner in which consent may be obtained, and nothing more.”  In the court’s view, Regulation E’s intent was “to delineate specific information banks must provide to customers, not to more broadly prevent misleading or deceptive conduct in connection with the opt-in decision—the purview of the CFPA.”  Because the amended complaint did not allege that TCF failed to provide reasonable or appropriate means for consumers to provide consent, the court concluded that the CFPB’s “reasonable opportunity” claim failed.

The court also characterized the CFPB’ claim that customers failed to “affirmatively consent” because they did not understand what they were agreeing to as an attempt to “squeeze the CFPA’s broader proscriptions against misleading conduct into [Regulation E].”  The court noted that the amended complaint contained no plausible allegation that TCF failed to “actually obtain” new or existing customers’ consent to overdraft services. (emphasis provided). Calling this deficiency “fatal,” the court observed that Regulation E “requires a bank to obtain ‘affirmative consent’ and nothing more, and it is not infused with the CFPA’s gloss of preventing ‘abusive’ or ‘deceptive’ conduct.  By the Bureau’s reckoning, it would not be enough to obtain a consumer express (or ‘affirmative’) consent, but rather a bank such as TCF would be required to obtain the customer’s informed consent, lest it violate Regulation E.” (emphasis provided).

Last month, the CFPB issued another report on checking account overdraft services and four one-page prototype model forms to replace the current Regulation E model form for banks to use to disclose overdraft fees and obtain a consumer’s consent to overdraft services.  In its Spring 2017 rulemaking agenda, as it did in its Fall 2015 agenda and Fall and Spring 2016 agendas, the CFPB stated that it “is continuing to engage in additional research and has begun consumer testing initiatives related to the opt-in process.”

In an unusual procedural move last week in the RD Legal Funding case about which we have previously blogged, SDNY Judge Loretta Preska (the judge presiding over the CFPB’s lawsuit against RD Legal Funding) has referred to EDPA Judge Anita Brody the question of whether the NFL Concussion Litigation settlement agreement forbids assignments of settlement benefits. Judge Brody has been presiding over the multidistrict litigation for over five years and is currently overseeing the implementation of the settlement. Within the Order, Judge Preska noted “[t]his case presents an unusual situation in which the Defendants’ underlying conduct is intertwined with an MDL class action settlement in another court,” and stated the referral “ensures uniformity of adjudication with a single ruling that will apply not only to the Defendants in this action but also to other potential lenders to class members who might assert the same defense[.]” The referral had been requested by the NFL Concussion Litigation Co-Lead Class Counsel, Christopher Seeger.

In related news, earlier this week Judge Brody granted a request from Seeger to compel several entities to produce (1) a list of all retired NFL players with whom the entities communicated, (2) a list of all retired NFL players with whom the entities entered into agreements related to the NFL Concussion Settlement, and (3) a copy of any agreement related to the settlement. However, Judge Brody denied Seeger’s request to compel production of similar information from RD Legal Funding.

On September 5, 2017, the CFPB entered into a consent order with Zero Parallel, LLC (“Zero Parallel”), an online lead aggregator based in Glendale, California. At the same time, it submitted a proposed order in the U.S. District Court for the Central District of California, where it is litigating with Zero Parallel’s CEO, Davit Gasparyan. Zero Parallel and Gasparyan agreed to pay a total of $350,000 in civil money penalties to settle claims brought by the CFPB.

In the two actions, the CFPB claimed that Zero Parallel, with Gasparyan’s substantial assistance, helped provide loans to consumers which would be void under the laws of the states in which the consumers lived. Zero Parallel allegedly facilitated the loans by acting as a lead aggregator. In that role, Zero Parallel collected information that consumers entered into various websites indicating that they were interested in taking out payday or installment loans. Zero Parallel then transmitted consumers’ information to various online lenders which evaluated the consumers’ information. The lenders then decided whether they wished to make the loans. If they did, the lenders purchased the leads from Zero Parallel and interacted directly with consumers to complete the loan transactions. (More on the lead generation process in our previous blog postings.)

In some cases, the lenders who purchased the leads offered loans on terms that were prohibited in the states where the consumers resided. The CFPB claims that such loans were therefore void. Because Zero Parallel allegedly knew that the leads it sold were likely to result in void loans, the CFPB alleged that Zero Parallel engaged in abusive acts and practices. Under the consent order, and the proposed order, if it is entered, Zero Parallel will be prohibited from selling leads that would facilitate such loans. To prevent this from happening, the orders require Zero Parallel to take reasonable steps to filter the leads it receives so as to steer consumers away from these allegedly void loans.

The CFPB also faulted Zero Parallel for failing to ensure that consumers were adequately informed about the lead generation process. This allegedly caused consumers to get bad deals on the loans they took out.

Consistent with our earlier blog posts about regulatory interest in lead generation, we see two takeaways from the Zero Parallel case.  First, the CFPB remains willing to hold service providers liable for the alleged bad acts of financial services companies to which they provide services. This requires service providers to engage in “reverse vendor oversight” to protect themselves from claims like the ones the CFPB made here.  Second, the issue of disclosure on websites used to generate leads remains a topic of heightened regulatory interest. Financial institutions and lead generators alike should remain focused such disclosures.

A federal district court in Atlanta has granted the defendants’ motions for Rule 37 sanctions against the CFPB for its conduct in connection with the defendants’ depositions of CFPB witnesses.  To sanction the CFPB, the court struck four counts from the CFPB’s complaint, and with no claims remaining against them, the court dismissed the defendants who sought the sanctions from the case.

The underlying case is a CFPB enforcement action filed in April 2015 targeting an alleged debt collection scam that named as defendants not only the debt collectors and their individual principals but various companies alleged to have been “service providers” to the collectors, including payment processors.  The CFPB claimed that the payment processors were subject to its enforcement authority as both “covered persons” and “service providers” under the CFPA.

The CFPB’s complaint alleged that the debt collectors, using information purchased from debt and data brokers, made phone calls to consumers in which they threatened arrest or notice to a consumer’s employer unless the consumers agreed to settle debts falsely claimed to be owed.  The CFPB claimed that the payment processors facilitated the alleged scheme by enabling the debt collectors to accept credit and debit card payments.  According to the complaint, the processors engaged in deficient underwriting when they agreed to provide services for the debt collectors and failed to appropriately monitor the debt collectors’ accounts, including by ignoring signs that the debt collectors were committing fraud, such as high chargeback volumes.

The payment processor defendants argued that the CFPB had not presented a knowledgeable witness because its designated witness relied heavily on various “memory aids” and was not prepared to testify as to any exculpatory facts.  The court agreed, characterizing the “memory aids” used by the CFPB’s witness as “scripts” and finding that “the witness was hardly able to offer any testimony beyond what he read off the memory aids.  And…the readings were often unrelated to the question asked.”  According to the court, by displaying an inability to answer follow-up questions or stray from the memory aids, the CFPB’s witness had failed to abide by instructions given by the court that the witness be able “to provide a ‘human touch’ by responding to Defendants’ follow-up questions.”

The court also found that the position taken by the CFPB’s witness that he was unable to identify any exculpatory facts was not reasonable and reflected an unwillingness to comply with the court’s instructions that the CFPB be prepared to testify as to any facts “it could reasonably identify as exculpatory.”  The court found the CFPB’s insistence that it could not find any exculpatory evidence to also reflect “a bad faith attempt to frustrate the purpose of the Defendants’ depositions” and concluded that such conduct amounted to a failure to present a knowledgeable witness.

As their second argument in support of sanctions, the payment processors argued that the CFPB had improperly relied on privilege objections to prevent its witness from answering questions about the factual bases of the CFPB’s claims.  In particular, the processors pointed to the CFPB’s refusal to answer on the basis of work product questions regarding the facts on which the CFPB was relying to establish its claim that the defendants either knowingly or recklessly disregarded unlawful conduct engaged in by the debt collector defendants.

The court found that the CFPB’s continued assertion of privilege objections showed “blatant” and “willful” disregard for the court’s instructions that the CFPB answer questions regarding facts within its knowledge supporting the CFPB’s claims of knowledge or recklessness.  In the court’s view, the CFPB had “put up as much opposition as possible at every turn” to the court’s instruction that it “needed to produce a witness prepared to apprise the Defendants of the facts they would face at trial.”  The court observed that the CFPB’s opposition took two forms: (1) “to bury the Defendants in so much information that it cannot possible identify, with any reasonable particularity, what supports the CFPB’s claims,” and (2) “to assert privilege objections to questions that the Court has repeatedly ordered to be answered.”

Concluding it was not “optimistic that reopening the depositions would be fruitful” in light to the CFPB’s pattern of conduct, the court struck the four counts of the complaint containing the CFPB’s UDAAP and “substantial assistance” claims against the payment processors.  Having stricken all of the CFPB’s claims against them, the court then dismissed these defendants from the case.

We see several significant takeaways from the court’s ruling.  First, it will likely serve as an additional factor to encourage financial services companies to be more willing to litigate CFPB enforcement claims.  We have seen an increase in parties litigating cases with the CFPB recently, and in our view, the success of the defendants in this case will further encourage parties to believe that successfully defending a CFPB enforcement action is a real possibility.

Second, in contested cases, the ruling will provide a road map for parties to seek discovery from the CFPB about the factual basis for its claims and the information discovered during its investigation.  In this sense, the decision really illustrates the level playing field that the CFPB finds itself on when it litigates a case in court, which is very different from the one-way discovery that occurs in connection with a civil investigative demand.

Third, we would hope that the decision will change the CFPB’s approach to participating in discovery in litigation – to be more open about the basis for its claims – in order to prevent its enforcement cases from being disposed of in the manner that played out here, and to carry its motto of being a transparent agency through to its litigated matters.

 

RD Legal Funding, LLC is seeking to dismiss the lawsuit filed against it, two of its affiliates, and their individual principal in February 2017 by the CFPB and the New York Attorney General in a NY federal district court alleging that a litigation settlement advance product offered by the defendants is a disguised usurious loan that is deceptively marketed and abusive.  In particular, the complaint alleged that the transactions were falsely marketed as assignments rather than loans and violated New York usury laws. The complaint also alleged that the transactions could not be assignments because the underlying settlements expressly prohibited assignment of claimant recoveries.

In the complaint, both the CFPB and the NY AG asserted deception and abusiveness claims under Sections 1031 and 1042 of Dodd-Frank.  In addition to alleged violations of state civil and criminal usury laws (which were the predicate for one of the CFPB’s deception claims), the NY AG’s state law claims included alleged violations of NY’s UDAP statute.

In their motion to dismiss, the defendants argue that the court should strike down the CFPB as a whole (rather than make the Director removable without cause as the D.C. Circuit panel did in PHH) because its structure is unconstitutional.  The defendants’ other arguments for dismissal include: (1) the court does not have jurisdiction under the CFPA because the defendants’ transactions did not involve an extension of credit and therefore none of the defendants are “covered persons” under the CFPA, (2) the complaint’s deceptive conduct claims fail to meet the heightened pleading standard for claims based on allegations of fraud, (3) the complaint fails to allege abusive conduct because the defendants’ representations about the nature of the transactions were truthful and consumers were encouraged to seek professional advice before entering into a transaction, and (4) state usury laws do not apply because the transactions were sales.

In addition to defending the constitutionality of the CFPB’s structure in their opposition to the motion to dismiss , the CFPB and NY AG assert that the defendants are “covered persons” under the CFPA because they offered or extended credit through the transactions and that all counts in the complaint state valid claims for relief (for reasons that include the argument that heightened pleading standards for fraud claims do not apply to consumer protection claims under the CFPA or NY law.)

When the complaint was filed, the CFPB and the NY AG issued press releases and prepared remarks in which they referenced transactions entered into by the defendants with former NFL players who were entitled to payments from the settlement of the NFL concussion litigation.  Class counsel for the plaintiff settlement class in the concussion litigation filed a letter with the NY district court seeking permission to file a memorandum of law as amicus in support of the CFPB.  In their proposed memorandum, they assert that their participation is intended to address the defendants’ “erroneous” position that the settlement agreement in the concussion litigation permits the assignment of the settlement’s monetary awards.

A request to file a memorandum of law as amicus in support of the CFPB was also filed by the American Legal Finance Association (ALFA), which describes itself as a trade association that represents the country’s leading consumer legal funding companies.  In its memorandum, ALFA indicates that, due to the possibility that a holding in the case could impact the entire legal funding industry, its participation is intended to “assist the Court with expertise not otherwise represented by the parties” regarding the differences between the pre-settlement legal funding transactions offered by ALFA members and the defendants’ transactions.

The defendants opposed the requests of class counsel and ALFA to participate as amici and while the case docket indicates that the court granted permission to ALFA to file its amicus memorandum, it does not indicate the disposition of class counsel’s request.

On November 21, 2017, from 12 p.m. to 1 p.m. ET, Ballard Spahr attorneys will hold a webinar: Litigation Funding: Risks and Rewards.  Click here to register.

 

The Minnesota Attorney General announced that she has filed a lawsuit in state court against two pension advance companies.

According to the AG’s press release, the companies often solicited borrowers through their own websites or websites of “lead generators” who marketed “pension loans” or “loans that can fit your needs.”  The press release states that the transactions required military veterans and senior citizens to assign portions of their monthly pension payments for up to ten years in exchange for much smaller cash amounts (usually less than $5,000) on which the AG claimed the companies typically charged annual percentage rates of 200 percent.

The lawsuit is reported to allege that the companies violated Minnesota lending laws by making loans to Minnesota borrowers without being licensed as a lender and sought to evade Minnesota law by falsely characterizing the transactions as pension “purchase agreements” rather than loans.

In February 2017, the CFPB and the New York Attorney General filed a lawsuit in which they alleged that a litigation settlement advance product offered by the defendant was a usurious loan that was deceptively marketed as an assignment.  In August 2015, the CFPB and the New York Department of Financial Services filed a lawsuit against two pension advance companies in which the CFPB and NYDFS made similar allegations regarding the advances made by the companies.

The Minnesota AG’s lawsuit and the CFPB/NY lawsuits not only indicate that pension advance companies and litigation funding companies have become targets of regulatory enforcement actions, but also suggest that merchant cash advance providers and other finance companies whose products are structured as purchases rather than loans could face heightened scrutiny from state and federal regulators.

 

A Florida federal district court has granted the motion filed by Ocwen Financial Corporation to invite the U.S. Attorney General to express the AG’s views on the CFPB’s constitutionality.

In April 2017, the CFPB filed a lawsuit against Ocwen in which it alleged Ocwen had engaged in unlawful conduct in connection with its servicing of residential mortgages.  In anticipation of filing a motion to dismiss challenging the CFPB’s constitutionality, Ocwen filed a motion in which it asked the court to invite the AG to participate in the briefing on the motion to dismiss.  In its motion, Ocwen referenced the amicus brief filed by the AG in the D.C. Circuit’s en banc rehearing in the PHH case in which the AG agreed with PHH’s position that the CFPB’s structure is unconstitutional.  Ocwen asserted that because the AG’s views on the CFPB’s constitutionality conflict with those of the CFPB, it was necessary for the court to hear “both sides from the government entities.”

In June 2017, Ocwen filed a motion to dismiss in which it argued that the CFPB’s structure violates the U.S. Constitution’s separation of powers.  In its order entered last week granting Ocwen’s motion to invite the AG to participate, the court stated that “[i]n light of [Ocwen’s] constitutional concerns, the Court finds it appropriate and prudent to ask the Attorney General of the United States to share with the Court its views on the issues raised in [Ocwen’s motion and the CFPB’s response].”

The order provides that “[p]ursuant to 28 U.S.C. section 2403 and Federal Rule of Civil Procedure 5.1, the court certifies to the [AG] that a statute has been questioned and permits the United States to intervene.”  (Section 2403 requires district courts to notify the AG of a constitutional challenge in which the United States is not a party.)  The order sets an October 2, 2017 deadline for the AG’s brief, an October 16, 2017 deadline for the CFPB to respond, and an October 23, 2017 deadline for the AG’s reply brief.

The CFPB has issued a new compliance bulletin (2017-11) to provide guidance on pay-by-phone fees.  The guidance includes examples of conduct relating to pay-by-phone practices identified by the CFPB in its supervision and enforcement activities that may violate or risk violating the Dodd-Frank UDAAP prohibition or the FDCPA.

The enforcement actions cited in the guidance involving alleged UDAAP violations arising from pay-by-phone practices date from 2015 and, while recent CFPB supervisory highlights have discussed potential FDCPA violations arising from “convenience fees” charged by debt collectors to process payments by phone, recent supervisory highlights have not discussed potential UDAAP violations arising from pay-by-phone practices.  As a result, the CFPB’s issuance of the guidance suggests that it intends to give pay-by-by phone practices closer scrutiny in examinations and in enforcement actions.  We have been reviewing and suggesting revisions to many clients regarding their pay-by-phone practices since the CFPB began focusing on this area in examinations.  It is important for creditors and debt collectors to be mindful that such practices may also create a risk of state law violations.

Examples provided of conduct that may violate the UDAAP prohibition include:

  • Failing to disclose the prices of all available pay-by-phone services when different options carry materially different fees.  According to the CFPB, while many companies disclose in periodic billing statements or elsewhere that a transaction fee may apply to various payment methods, they do not disclose the fee amounts and instead depend on phone representatives to do so.  The CFPB observes that phone representatives risk engaging in an unfair practice by only revealing higher-cost options or failing to inform consumers of material price differences between available options.
  • Misrepresenting the available payment options or that a fee is required to pay by phone.  The CFPB observes that some companies charge a fee for expedited phone payments but also offer no-fee phone payment options that post a payment after a processing delay.  According to the CFPB, some of such companies offer their fee-based expedited payment option as their default pay-by-phone option, with the result that consumers could be misled to believe that a fee is always required to pay by phone and cause consumers to be charged for expedited payment even if such consumers did not need to post a payment on the same day.
  • Failing to disclose that a pay-by-phone fee would be added to a payment.  According to the CFPB, a company may risk engaging in a deceptive act or practice by failing to disclose that a pay-by-phone fee will be charged in addition to a consumer’s otherwise applicable payment amount and indicating that only the otherwise applicable payment amount will be charged.  In the CFPB’s view, such conduct may create the misimpression that no pay-by-phone fee is charged.
  • Failing to adequately monitor employees or oversee service providers. The CFPB observes that although a company may have policies and procedures requiring phone representatives to disclose all available pay-by-phone options and fees, deviations from call scripts may cause phone representatives to misrepresent available options and fees.  According to the CFPB, companies can reduce the risk of misrepresentations through adequate monitoring and references its November 2016 compliance bulletin (2016-03) on production incentives.  The CFPB suggests that companies should consider the impact of incentives for employees and service providers may have on compliance risks relating to potential UDAAP violations.

Examples of conduct that may violate the FDCPA:

  • The CFPB notes the FDCPA prohibition on the collection of any amount by a debt collector unless such amount is expressly authorized by the agreement creating the debt or permitted by law.  The CFPB states that its examiners found that one or more mortgage servicers meeting the FDCPA “debt collector” definition violated the FDCPA by charging fees for taking mortgage payments by phone to borrowers whose mortgage instruments did not expressly authorize such fees and who resided in states where applicable law did not expressly permit collection of such fees.

The guidance indicates that the CFPB expects companies to review their practices on charging pay-by-phone fees for potential risks of UDAAP or FDCPA violations and provides suggestions for companies to consider in assessing whether their practices present a risk of constituting a UDAAP or FDCPA violation.  It also advises companies to consider whether production incentive programs create incentives to steer consumers to certain payment options or avoid disclosures.  According to the CFPB, such incentives could enhance the potential risk of UDAAPs if they reward employees or service providers based on consumers using a higher-cost pay-by-phone option or based on the number of daily calls completed.

 

Based on a Law360 article reporting on an interview with Thomas Pahl, the Acting Director of the FTC Bureau of Consumer Protection, it appears that under its new leadership, the FTC will take a less aggressive approach to enforcement than the agency had taken under the Obama Administration.  Mr. Pahl was appointed Acting Director by Maureen Ohlhausen, who President Trump named Acting Chairman of the FTC.

While Mr. Pahl stated that privacy enforcement will continue to be an FTC priority, he indicated that the FTC will not follow the Obama Administration’s approach of labeling certain privacy and data security practices unfair or deceptive in the absence of clear consumer harm.  According to Mr. Pahl, the FTC’s enforcement activity will target practices where there is concrete, tangible evidence of consumer injury.

With regard to national advertising, Mr. Pahl indicated that the FTC’s enforcement activity will focus on fraud and quasi-fraud and will prioritize matters involving advertising and marketing directed at certain populations such as the military, the elderly, and consumers living in rural areas.  He also indicated that in deciding whether to recommend an enforcement action, FTC staff will look at consumer injury and the costs and benefits of a practice.

With regard to financial practices, Mr. Pahl indicated that the FTC’s enforcement activity will target matters involving fraud or quasi-fraud in areas such as debt collection and payday lending, with priority given to matters that are outside of the CFPB’s jurisdiction.  Such matters include claims against auto dealers, claims under the Credit Repair Organizations Act, and claims against companies belonging to industries for which the CFPB has created a “larger participant” rule, such as debt collectors, but that do not qualify as a “larger participant.”  Under the Dodd-Frank Act, the CFPB has authority to supervise, regardless of size, providers of residential mortgage loans and certain related services, payday loans, and private education loans.  Dodd-Frank also gave the CFPB supervisory authority over providers considered to be “a larger participant of a market for other consumer financial products or services.”

Once CFPB Director Cordray departs and is replaced by a successor appointed by President Trump, we would hope and expect that he or she will narrow the CFPB’s enforcement priorities in a manner similar to what Mr. Pahl has described for the FTC.

 

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.