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What should you know about CFPB investigations?

On Behalf of | Nov 1, 2022 | Corporate Litigation

The Consumer Financial Protection Bureau (CFPB) provides federal protection for consumers involved with financial institutions. The goal of the CFPB involves making consumer markets more effective by upholding the laws governing them. Congress grants the CFPB the power to investigate New York companies that may be suspected of violating laws in the consumer financial sector.

Role of the CFPB

As a federal agency, the CFPB carries out multiple roles in order to protect consumers. These include:

  • Making rules
  • Supervising
  • Enforcing rules
  • Educating

CFPB’s jurisdiction

The Consumer Financial Protection Act of 2010 created the CFPB and gave it jurisdiction over a number of consumer agencies. As a result, the CFPB holds responsibility for enforcing these agencies and laws:

  • Equal Credit Opportunity Act
  • Fair Debt Collections Practices Act
  • Consumer Leasing Act
  • Federal Deposit Insurance Act
  • Home Mortgage Disclosure Act
  • Truth in Lending Act
  • Truth in Savings Act

CFPB enforcement

Under banking and finance law the CFPB may charge you in federal court or within CFPB’s administrative proceedings. To begin an enforcement process, the CFPB must first receive notification that violations are occurring. These notifications typically happen through these channels:

  • Complaints by consumers
  • Whistleblower hotline
  • Agents from other agencies
  • Supervisory exams

Options during a CFPB investigation

If the CFPB decides to investigate you, you will receive a Civil Investigative Demand (CID). After receiving a CID, you need to:

  • Issue a notice for record retention
  • Negotiate the CID’s scope
  • Collect relevant information and materials
  • Issue a response to the CID
  • Wait for the CFPD to make a decision

Prepare for a complex legal process

Being granted federal enforcement powers means that the CFPB employs very experienced lawyers and investigators. Before they issue a CID to you, they have already thoroughly investigated the case. The legal fight against the CFPB may take years to complete and may affect your professional reputation.