Over the past four years, the Consumer Financial Protection Bureau (CFPB) has issued a wide range of enforcement actions and consent orders against various kinds of actors, including debt collectors, for alleged violations of federal consumer financial protection laws. But who has been hit the hardest?

A new Tulane Law Review study by University of Utah law professor Christopher Peterson, a Special Advisor to CFPB Director Richard Cordray, finds that banks have paid the most in penalties and restitution. In fact, despite only being subject to a quarter of the CFPB’s enforcement actions, banks have paid more than 60% of the total penalties and restitution collected by the Bureau.

Peterson asserts that the study is independent from the CFPB and doesn’t represent the Bureau’s views, instead focusing on the question of whether “the United States succeeded in creating an effective consumer financial civil law enforcement agency.” To that point, Peterson makes the case in the study that the CFPB is a success, but could be much harsher on financial institutions than it has been thus far.

Peterson asserts the following things in the study:

  • The CFPB has “built an effective and professional law enforcement staff.”
  • The CFPB has chosen their cases well, due to their not losing cases and having a minority of enforcement actions challenged by the regulated party. In fact, “no bank has publicly contested a public CFPB enforcement action.”
  • That the majority of consumer relief has been “awarded in CFPB cases in which the defendants illegally deceived consumers,” and in collaboration “with other state, tribal, or federal law enforcement partners.”
  • The CFPB has been willing and able to hold individuals at financial institutions liable for illegal acts when warranted.
  • The CFPB has “proceeded cautiously” when enforcing “abusive” acts and practices.
  • The Bureau “generated approximately $9.3 million per employee in refunds, redress, and forgiven debts for U.S. consumers.”

The study concludes with Peterson saying that the CFPB’s work in fighting illegal financial practices “should remain a top supervisory and enforcement priority for the Bureau,” arguing that criticism is based on “vapid allegations” which are “thoughtlessly untethered from reality.”

insideARM Perspective

Many financial institutions, both in the ARM industry and in other industries, will likely object to Peterson’s argument that the CFPB has taken it easy with respect to its enforcement actions thus far. (For one thing – in general, the difference in size/revenue between banks and non-bank organizations is vast. So it makes some sense that the absolute dollar amount of penalties would be larger for banks.)

That said, this study is instructive in understanding how the Bureau views its work internally, and could be seen as a signal that much more aggressive activity from the CFPB will be coming in the future.

For an in-depth look at this subject, be sure to check out insideARM’s report The CFPB’s Consent Orders Regulating the ARM Industry, available now. The report is the first of its kind designed to help the debt collection industry comply with the CFPB’s consent orders. It includes every relevant CFPB consent order – organized, analyzed, and summarized. You can purchase the updated version of the report every quarter, or join the Compliance Professionals Forum and get every update for free, as well as a wealth of other resources, all for one price.


Tags: CFPB

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