The CFPB has issued a request for information that seeks comment on its adopted regulations and new rulemaking authorities.  Comments on the RFI must be received by June 19, 2018.

As used in the RFI, the “Adopted Regulations” generally include “all final rulemakings that the Bureau issued after providing notice and seeking public comment, including any accompanying Official Interpretations (commentary) issued by the Bureau.”  For purposes of the RFI, the Adopted Regulations include statutorily–mandated or discretionary rules issued by the CFPB pursuant to rulemaking authority transferred by Dodd-Frank from another agency to the CFPB as well as new CFPB rulemaking authorities created by Dodd-Frank.

The RFI’s Supplementary Information distinguishes the Adopted Regulations from the CFPB’s Inherited Regulations.  The Inherited Regulations are the regulations issued by other agencies pursuant to rulemaking authority transferred to the CFPB by Dodd-Frank.  Many of the Adopted Regulations amended the Inherited Regulations.

Although the CFPB’s 2015 HMDA rule and its 2017 small dollar loan rule are Adopted Regulations, the CFPB is not currently requesting feedback on those rules because it has previously announced that it intends to engage in further rulemaking to reconsider those rules. The CFPB also notes that although it had previously announced that it was conducting assessments of certain Adopted Regulations concerning remittance transfers, mortgage servicing, and ability to repay and qualified mortgages, respondents to the RFI are free to comment on those rules.  However, for purposes of the RFI, the CFPB will consider any comments previously received in connection with the assessments.

Subject to those qualifications, the CFPB seeks feedback on all aspects of the Adopted Regulations, including the following:

  • Aspects of the Adopted Regulations that should be tailored to institutions of particular types or sizes, create unintended consequences, overlap or conflict with other laws or regulations so as to make compliance difficult or particularly burdensome, are incompatible or misaligned with new technologies, or could be modified to provide consumers more protection from identity theft
  • Changes the CFPB could make to the Adopted Regulations to more effectively meet the statutory purposes and objectives set forth in the federal consumer financial laws and the CFPB’s goals for a particular regulation
  • Changes the CFPB could make to the Adopted Regulations that would advance the CFPB’s statutory purposes set forth in Section 1021 of Dodd-Frank
  • Pilots, field tests, demonstrations, or other activities the CFPB could launch to better quantify benefits and costs of potential revisions to the Adopted Regulations or to make compliance with the Adopted Regulations more efficient and effective
  • Areas where the CFPB has not fully exercised its rulemaking authority in connection with a specific Adopted Regulation or with regard to rulemaking authority created by Dodd-Frank and where rulemaking would be beneficial and align with the purposes and objectives of applicable federal consumer financial laws

The new RFI represents the eighth in a series of RFIs announced by Mr. Mulvaney.  The subjects of the CFPB’s first seven RFIs and their comment deadlines are as follows:

In its press release announcing the latest RFI, the CFPB stated that the next RFI in the series will be issued next week and will address the CFPB’s Inherited Regulations and inherited rulemaking authorities.



The CFPB has issued a request for information that seeks comment on its rulemaking processes.  Comments on the RFI must be received by June 7, 2018.

The RFI begins with a review of the statutory requirements that are relevant to the CFPB’s rulemaking processes.  The RFI discusses the Administrative Procedure Act notice-and-comment requirements, the Regulatory Flexibility Act requirements for rulemakings that will have a significant impact on a substantial number of small business entities (often referred to as the SBREFA process), federal law requirements for various impact analyses of proposed and final rules, and federal law requirements and MOU agreements for consultation with other federal agencies.

The CFPB states that while many elements of its rulemaking are required by law, a number of its rulemaking processes, and certain elements of how it implements required processes, are discretionary. The RFI is intended to obtain public input on the discretionary aspects of the CFPB’s rulemaking processes.

In the RFI, the CFPB seeks feedback on all discretionary aspects of its rulemaking processes, including the following:

  • Mechanisms used by the CFPB to gather information, data, and feedback from stakeholders such as RFIs
  • Convening a SBREFA panel, including the outline of the proposal under consideration, selection and interaction with small entity representatives, and the SBREFA panel report
  • Various issues relating to Notices of Proposed Rulemaking, such as the content of the NPRM itself, the CFPB’s practices with regard to issuing a NPRM, length of comment periods, processing and posting of comments, outreach and engagement during and after the comment period, and consideration of new data and other information issued by other agencies or third parties after a NPRM is released
  • Content of a notice issuing a final rule and the CFPB’s practices in advance of a final rule’s publication in the Federal Register, such as issuing a press release and having the Director present remarks at a public event or on a press call

The new RFI represents the seventh in a series of RFIs announced by Mr. Mulvaney.  The subjects of the CFPB’s first six RFIs and their comment deadlines are as follows:

In its press release announcing the latest RFI, the CFPB stated that the next RFI in the series will be issued next week and will address the CFPB’s adopted rules.


On January 26, 2018, the CFPB published a “Request for Information Regarding Bureau Civil Investigative Demands and Associated Processes” (“Request”) in the Federal Register. In the Request, the CFPB asks industry and attorneys who regularly practice before the Bureau to comment on its processes surrounding Civil Investigative Demands (“CID”) and investigational hearings. Comments are due by March 27, 2018 and can be submitted electronically, by email, by regular mail, or by hand-delivery. The Request indicates that all comments will be posted online without change.

The CFPB requested comments on several specific topics, but did not limit comments to them. The topics include:

  1. The process for issuing CIDs; the authority of CFPB personnel to issue them; how CIDs  can be made less burdensome; and the timeframes and processes for complying with or challenging them.
  2. The requirements for responding to CIDs, including certification requirements, and the CFPB’s document submission standards.
  3. Transparency with CID recipients as to the focus of the investigation and what information the CFPB needs to conduct its investigation.
  4. The process for dealing with the inadvertent production of privileged information and whether that process should more closely mirror the Federal Rules of Evidence.
  5. The process for conducting investigational hearings of business entities, including whether it should more closely mirror the Federal Rules of Civil Procedure and whether counsel should be able to offer objections at investigational hearings.

This Request is one of the CFPB’s first opportunities to receive official comments from industry on its enforcement process. While the CFPB has requested comments on its rules and processes before, some people in the industry felt their comments were ignored. With the recent change of leadership, we anticipate a CFPB that will be more receptive to the concerns of industry. We therefore view the Request as an important opportunity for the industry to argue for permanent changes to the CID process, and to make the CID process more efficient, less expensive, and fairer to the targets of investigations.

On January 25, the CFPB finalized certain changes to the original Final Prepaid Rule (the “Rule”) proposed last summer.  The amended Rule still contains onerous restrictions on credit features and complicated disclosure requirements, but the changes are generally positive for prepaid providers and incorporate feedback from industry representatives.  Importantly, due to concerns about implementation difficulties, the effective date of the Rule, which was originally October 1, 2017 and delayed to April 1, 2018, is now further delayed to April 1, 2019.

The changes reverse two controversial aspects of the original Rule, and make several other changes:

  • Error Resolution and Limitation of Liability. One of the original Rule’s most controversial mandates required error resolution and limited liability protections for unregistered accounts (e., accounts that have not concluded the verification process, accounts where the process is concluded but the consumer’s identity could not be verified, and accounts in programs for which there is no such verification process).  Acknowledging “financial institutions’ fear of fraud losses,” the CFPB changed the Rule to no longer require financial institutions to resolve errors or limit consumers’ liability for unregistered prepaid accounts until after a financial institution successfully completes its consumer identification and verification process.  Notably, the Rule differs from last year’s proposed changes by not requiring financial institutions to limit liability or resolve errors that occurred prior to verification on accounts that are later successfully verified.  If no verification process is available, financial institutions must disclose to consumers the absence of, or limitations on, such protections.
  • Digital Wallets. The amended Rule also narrows the definition of “business partner” under Regulation Z to clarify the Rule’s application to digital wallets and to alleviate burdens for digital wallet providers.  Under the amended Rule, business arrangements between prepaid account issuers and issuers of traditional credit cards are excluded from coverage under the Rule’s hybrid prepaid-credit card provisions as long as
  1. the prepaid card cannot access credit from the credit card account during a prepaid card transaction without written consent to link the two accounts,
  2. the acquisition or retention of either account is not conditioned on whether the consumer authorizes such a connection, and
  3. the parties do not vary certain terms and conditions based on whether the two accounts are linked.

Deviating from last year’s proposal, the Rule now permits digital wallet providers to run negative balances when a covered separate credit feature offered by a business partner is attached to the digital wallet as long as the following requirements are met:

  1. the digital wallet cannot access credit from the covered separate credit feature that is offered by its business partner;
  2. the digital wallet provider has a general policy and practice of declining transactions that will take the account negative (at least outside of the situations involving incidental credit); and
  3. the digital wallet provider generally does not charge credit-related fees.

These changes do not completely exclude digital wallets that can store funds, or person-to-person (“P2P”) payment products from the Rule, but it does ease compliance burdens on digital wallet providers that allow consumers to link their debit and credit cards and to store and access funds.

  • Loyalty, award, and promotional gift cards. The amended Rule clarifies that loyalty, award, or promotional gift cards that are not marketed to the general public are not covered by the Rule, regardless of whether they provide disclosures under the Gift Card Rule.
  • Unsolicited Issuance. Regulation E provides that a financial institution may only issue an access device for an account to a consumer on an unsolicited basis in accordance with certain requirements. The original Rule raised questions about how the unsolicited issuance rules applied where the consumer is given no other option but to receive the disbursement via a prepaid account, such as prison release cards, jury duty cards, and certain types of refund cards.  The amended Rule provides that, under such facts, the financial institution can comply with the unsolicited issuance rule by informing the consumer that there is no other way to access funds in the prepaid account if the consumer disposes of the access device.
  • Pre-Acquisition Disclosures. The CFPB finalized changes that provide additional flexibility regarding the pre-acquisition disclosures mandated by the Rule:
  1. If there are no alternative means for the consumer to receive funds from a prepaid account (other than a payroll card account or government benefit account), pre-acquisition disclosures may be provided at the time the consumer receives the prepaid account.
  2. The original Rule required financial institutions to provide a long form disclosure after a consumer acquires a prepaid account at a retail location. The amended Rule provides that financial institutions may deliver the long form disclosure after acquisition without E-Sign consent, as long as it is not provided inside the prepaid account packaging material, and the financial institution is not otherwise mailing or delivering to the consumer written account-related communications within 30 days of obtaining the consumer’s contact information. The amended Rule does not require a financial institution to provide the long form disclosure if it has not obtained the consumer’s contact information.
  3. Under the amended Rule, if a financial institution provides pre-acquisition disclosures in writing, and a consumer subsequently completes the acquisition process online or by telephone, the financial institution need not provide the disclosures again electronically or orally.
  4. Financial institutions disclosing additional fee types with three or more fee variations are now able to consolidate those variations into two categories and allow those two categories to be disclosed on the short form.
  5. The amended Rule clarifies that foreign language pre-acquisition disclosures for payroll card accounts and government benefit accounts are not required where the foreign language is offered by telephone only via a real-time language interpretation service provided by a third party.
  • Submission of Agreements. To reduce compliance burdens, the amended Rule makes several changes to the original Rule’s requirements requiring submission of prepaid account agreements to the CFPB:
  1. Issuers may delay submitting a change in the names of other relevant parties to a prepaid account agreement (such as employers for a payroll card agreement) until the earlier of: (a) the time the issuer submits an amended agreement or changes to other identifying information; or (b) May 1 of each year, for any updates to the list of names of other relevant parties that occurred between the issuer’s last submission of relevant party information for that agreement and April 1 of that year.
  2. Short form and long form disclosures may be provided as separate addenda to the agreement, rather than integrated into the agreement or provided as a single addendum.

With the announcement of these changes, the CFPB provided an Executive Summary of the amended Rule, and an unofficial redline of the changes.

The preamble to the amended Rule states that the CFPB will submit a report to Congress pursuant to the Congressional Review Act (“CRA”) containing the Rule and other required information, and also states that this is not a major rule under the CRA.  Because the Senate did not previously reject the Prepaid Final Rule under the CRA, and because the amended Rule contains a lot of concessions to industry participants, we think it’s unlikely there will be a significant push for the Rule’s rejection.

Mick Mulvaney, President Trump’s appointee as CFPB Acting Director, plans to make the CFPB’s practices of “pushing the envelope” and “rulemaking by enforcement” things of the past.

In a memorandum to CFPB staff and a Wall Street Journal article, Mr. Mulvaney described his governing philosophy for the CFPB’s exercise of its authority.  Mr. Mulvaney indicated that:

  • It is not appropriate for a government entity to “push the envelope” because of the potential harm to companies and their employees, with the possibility that a company may have to “close[] its doors under the weight of a multiyear Civil Investigative Demand” cited as an example of such harm.  While observing that there will be times when “dramatic action” is needed to protect consumers and that, at such times, he expected the CFPB “to be vigorous in [its] enforcement of the law,” Mr. Mulvaney stated that “bringing the full weight of the federal government down on the necks of the people we serve should be something that we do only reluctantly, and only when all other attempts at resolution have failed.”
  • In using its enforcement authority, the CFPB will focus on “quantifiable and unavoidable harm to the consumer” and when such harm does not exist, the CFPB “won’t go looking for excuses to bring lawsuits.”  In addition, there will be “more formal rule making and less regulation by enforcement”  because “the people we regulate should have the right to know what the rules are before being charged with breaking them.”
  • CFPB priorities should be guided by data such as 2016 complaint data which showed that “almost a third of the complaints” received by the CFPB related to debt collection and “[o]nly 0.9% related to prepaid cards and 2% to payday lending.”
  • In light of the Dodd-Frank Act requirement for the CFPB to “consider the potential costs and benefits to consumers and covered persons,” CFPB decisions should be driven by quantitative analysis.  Although qualitative analysis can play a role, it should not be to the exclusion of measurable “costs and benefits.”

We have been critical of the CFPB’s consistent attempts to “push the envelope” by adopting broad interpretations of its statutory authority with perhaps the most aggressive and public example of the CFPB’s “jurisdictional creep” being its efforts to indirectly regulate the conduct of car dealerships (which is expressly carved out from the CFPB’s jurisdiction by Dodd-Frank) by applying a questionable interpretation of the ECOA to impose disparate impact liability against auto finance companies.  Last month, we reported on the General Accountability Office’s determination that the CFPB’s bulletin setting forth its interpretation is a “rule” subject to override under the Congressional Review Act (CRA) and expressed our hope that Congress will override the bulletin under the CRA.

We were encouraged by the CFPB’s recent announcement that it intends to engage in a rulemaking process to reconsider its final small-dollar loan rule.  While a CRA override would provide a “cleaner” and quicker vehicle for overturning both the final small-dollar loan rule and the auto finance bulletin, we hope Mr. Mulvaney will also consider taking steps to reconsider the bulletin.

The CFPB announced today that it intends to engage in a rulemaking process to reconsider, pursuant to the Administrative Procedure Act, its final rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans (the “Payday Rule”).  The announcement fully accords with our expectation that the Payday Rule will never see the light of day in its current form.

If it were to go into effect, the Payday Rule would largely eliminate the availability of payday loans to the public.  In this regard, the Payday Rule reflected former CFPB Director Cordray’s hostility to payday lending and his failure to seriously consider how consumers who rely upon the product would be impacted by its elimination.  It was adopted on a crash basis shortly before Director Cordray’s resignation and largely disregarded over 1,000,000 comments from consumers articulating the critical benefits of payday loans.

To our mind, it was inevitable that Director Cordray’s successor would wish to re-evaluate the costs and benefits of the Payday Rule.  We think it highly likely that, at the end of the day, the new Director (whether Mick Mulvaney in an acting capacity or the as-yet-to-be-appointed permanent successor to former Director Cordray) will repeal the Payday Rule while he or she considers other options that can preserve the product and limit the potential for consumer injury.

Today’s announcement is good news for the millions of consumers who rely upon payday and title loans to meet their financial needs (and, of course, to the payday and title lending industries).

Yesterday, U.S. District Court Judge Timothy J. Kelly denied Leandra English’s motion for a preliminary injunction in a 46-page opinion. English had sought to block President Trump’s appointment of Mick Mulvaney to serve as the CFPB’s Acting Director. The Court denied that request and held that English failed to satisfy  any of the four elements of her preliminary injunction claim.

The Court found that English was unlikely to ultimately succeed on the merits of her claim. It held that the Vacancies Reform Act (“VRA”) gave President Trump the right to appoint a CFPB Acting Director and that the Dodd-Frank Act did not displace the President’s VRA authority. In reaching that conclusion, the Court relied on language in Dodd-Frank providing that all federal laws relating to federal employees or officers – such as the VRA – apply to the CFPB “except as otherwise provided expressly by law.” It found that Dodd-Frank’s reference to the Deputy Director’s service as the Acting Director in the Director’s “absence or unavailability” did not constitute an “express” provision of law overriding the VRA.

English had argued, under the canon of statutory construction that specific statutes trump general ones, that the Dodd-Frank provision was more specific than the VRA, and thus controlled. The Court soundly rejected this argument, finding that the VRA’s reference to “vacancies” was more specific to this situation than Dodd-Frank’s reference to the Director’s “absence or unavailability.”

The Court also rejected English’s argument that a different result was required because Dodd-Frank used the word “shall” in reference to the Deputy Director’s service as Acting Director. It relied on the commonsense notion that, while the word “shall” is generally mandatory, it is not necessarily unqualified. The court recognized that this very notion is embedded in Dodd-Frank itself. Dodd-Frank says that the Director “shall serve as the head of the [CFPB].” If “shall” were unqualified in that context, then the provision stating that the President “may” remove the Director for cause would be meaningless (and the statute nonsensical).

Further, relying on the doctrine of constitutional avoidance, the Court rejected English’s position because it would create serious constitutional problems. “Under English’s reading, the CFPB Director has unchecked authority to decide who will inherit the potent regulatory and enforcement powers of that office, as well as the privilege of insulation from direct presidential control, in the event he resigns. Such authority appears to lack any precedent, even among other independent agencies.”

If the CFPB Director had that much control over his successor, it would severely diminish the President’s control over Executive officers and thus his constitutional duty to “take care that the laws be faithfully executed,” the Court held. It also acknowledged that a panel of the D.C. Circuit has already found that the CFPB’s structure is unconstitutional. It held that English’s reading of the statutes would only exacerbate those problems.

English had equal difficulty convincing the Court that she would suffer irreparable harm if an injunction were not issued. The only harm she proffered was the intangible harm she would suffer from being unable to perform the duties of the Acting Director. The Court declined to adopt the reasoning of the only authority supporting the proposition that such harm was irreparable harm — an unpublished district court decision from 1983 involving the termination of officers of an agency that would automatically cease to exist under its implementing statute thus precluding their later reinstatement. The Court found that English “utterly failed to describe any [irreparable] harm.”

On the third and final elements of English’s claim – balance of the equities and public interest – the Court found her claim equally wanting. English said that the need for clarity meant that an injunction should issue. The Court held that, “There is little question that there is a public interest in clarity here, but it is hard to see how granting English an injunction would bring any more of it. . . . The President has designated Mulvaney the CFPB’s acting Director, the CFPB has recognized him as the acting Director, and it is operating with him as the acting Director. Granting English an injunction . . . would only serve to muddy the waters.”

Finding that English failed to meet her burden on even one element of her preliminary injunction claim, the Court denied her motion. The Court’s decision does not ultimately resolve the merits of the case and English will doubtless file an appeal with the D.C. Circuit. Because of the cloud that the ongoing litigation casts on the legality of any of Mulvaney’s actions, President Trump should appoint a permanent Director without delay.

The CFPB has submitted its Fall 2017 rulemaking agenda to the Fall 2017 Unified Agenda of Federal Regulatory and Deregulatory Actions issued by the Office of Information and Regulatory Affairs, a part of the Office of Management and Budget.  The preamble indicates that the information in the agenda is current as of September 28, 2017 and “lists the regulatory matters that the CFPB reasonably anticipates having under consideration during the period from November 1, 2017, to October 31, 2018.”

Since former Director Cordray’s resignation became effective at midnight on November 24, the agenda does not reflect the CFPB’s rulemaking plans under the Trump Administration.  Whether under the temporary leadership of Mick Mulvaney, President Trump’s designee as CFPB Acting Director, or the permanent leadership of a CFPB Director appointed by President Trump and confirmed by the Senate, the CFPB can be expected to review the rules and guidance finalized under former Director Cordray, and reassess the rulemaking activities that were in process at the time of his resignation.

The new agenda’s likely irrelevance is perhaps confirmed by the absence of any CFPB blog post about it.  It had previously been the CFPB’s practice to publish a blog post announcing the online posting of an updated agenda it had submitted to the Unified Agenda.

Readers interested in viewing the preamble and agenda can do so at the links provided above.  However, given the agenda’s unreliability as a road map of future CFPB rulemaking activity, rather than describing its contents in a blog post, we will instead hold a webinar on January 16, 2018, from 12 p.m. to 1 p.m. ET, on the fate of final and in-process CFPB rules under the Trump Administration.  Click here for more information and to register.

The CFPB announced last Thursday that it expects to issue a final rule amending its final prepaid accounts rule “soon after the new year.”  In June 2017, the CFPB issued proposed amendments to the rule.

In its announcement, the CFPB also stated that, as part of that process, it expects to further extend the rule’s effective date.  The CFPB previously extended the rule’s initial October 1, 2017 effective date to April 1, 2018.  In the proposal, the CFPB sought comments on whether the  proposed amendments would make a further extension of the rule’s effective date necessary or appropriate.

The proposal included changes to two of the rule’s particularly controversial aspects: its error resolution and limited liability protections for unregistered accounts and its application to digital wallets.  It also included changes or clarifications regarding: the rule’s coverage of loyalty, award, and promotional gift cards; application of the Regulation E unsolicited issuance rules to certain prepaid cards; delivery of the long form disclosure under the retail location exception; provision of pre-acquisition disclosures; and submission of prepaid account agreements to the CFPB.

The CFPB has announced that with regard to the collection in 2018 of the expanded data fields under the revised Home Mortgage Disclosure Act (HMDA) rules, the CFPB does not intend to require data resubmission unless data errors are material, and does not intend to assess penalties with respect to errors in the data collected in 2018.

As we reported previously, in October 2015 the CFPB adopted significant changes to the HMDA rules that significantly expanded the amount of information that must be collected and reported, and the institutions that are required to collect and report data. Most of the data collection changes are effective January 1, 2018. In announcing the approach to enforcement, the CFPB acknowledged the significant systems and operational challenges faced by the industry in implementing the changes.

The CFPB also noted that any examinations of 2018 HMDA data will be diagnostic to help institutions identify compliance weaknesses, and indicated that it will credit good faith compliance efforts. This approach was expected by the industry, as it is consistent with the approach taken by the CFPB with the implementation of other significant mortgage rules. The FDIC and OCC also issued similar statements.

Significantly, the CFPB also announced that it intends to engage in a rulemaking to reconsider various aspects of the revised HMDA rules, such as the institutions that are subject to the rules, including the related transactional coverage tests, and the discretionary data points that were added to the statutory data points by the CFPB.  While the industry has pressed for a reconsideration of various requirements, and the Trump administration has signaled it was receptive to considering changes, this is the first public announcement by the CFPB that it will reconsider the revisions made to the HMDA rules.