Consumer Law & Policy Blog

House Financial Services Committee Democrats Urge Trump Not to Fire Cordray

The letter is here.

CFPB Issues Debt Collection Studies, Finds a Quarter of Consumers Contacted By Debt Collectors Feel Threatened

Here.  Quoting from the Bureau's release:

 Consumer Financial Protection Bureau (CFPB) report released today found that over one-in-four consumers contacted by debt collectors felt threatened. The report was drawn from the first-ever national survey of consumer experiences with debt collectors. Over 40 percent of consumers who said they were approached about a debt in collection requested that a creditor or collector stop contacting them. Of these consumers, three-in-four report that debt collectors did not honor their request to cease contact. The CFPB is also releasing a study of potential risks in the online debt marketplace, where consumer debts and personal information are for sale for fractions of pennies on the dollar. Finally, the CFPB is unveiling an online series of consumers’ stories about their debt collection experiences.

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• More than half of consumers report incorrect contact for at least one debt: Fifty-three percent of consumers contacted about a debt in the year prior said at least one collection effort was mistaken in some way. These consumers reported that the creditor or collector sought the incorrect amount, that the debt was not owed, or that the person owing the debt was a family member.
• Over one-third of consumers report being contacted at inconvenient times: Thirty six percent of consumers contacted about a debt in collection said that the creditor or collector who most recently contacted them called between 9 p.m. and 8 a.m. Debt collectors generally cannot call at times they know to be inconvenient unless the consumer specifically agrees to it.
• Nearly 40 percent of consumers report that a debt collector attempted contact four or more times per week: Thirty seven percent of consumers contacted about a debt in collection report that the most recent creditor or collector to contact them usually did so four or more times in a week. About 20 percent of consumers approached by debt collectors reported contact attempts by debt collectors usually four to seven times per week. Another 17 percent said a creditor or debt collector tried contacting them eight or more times per week.
•  One-in-seven consumers contacted about a debt report being sued: Fifteen percent of consumers contacted about a debt in collection over the prior year report being sued. The share ranges from 6 percent sued among those contacted about a single debt to 35 percent sued among consumers contacted about five or more debts. About 75 percent of those sued do not go to the court hearing, which generally makes them responsible for the debt.

And here is a striking quote from Director Cordray's remarks:

But of those who were sued, only one out of four even attended the court hearing. This means that collectors can usually count on consumers ignoring or overlooking a lawsuit, which makes it easier to hold them responsible for the debt regardless of whether it can be documented or verified. 

GOP Senator Sasse: "It's time to fire King Richard" Cordray of CFPB

by Jeff Sovern

Senator Sasse joined with Senator Lee in a letter to President-Elect Trump; The Hill has the story here.  The letter doesn't mention that the Bureau has secured nearly $12 billion in relief for more than 27 million consumers, among other significant accomplishments. 

More Trump CFPB Transition/Landing Team Members Named, Including AEI Manager

by Jeff Sovern

As earlier reported by the CFPB Monitor and elsewhere, President-Elect Trump has named three new members to the CFPB "Landing Team."  One of the members, Kyle Hauptman, is a Senior Development Manager at the American Enterprise Institute. The AEI has on its website some articles that may give clues as to Mr. Hauptman's views, though the pieces are not authored by Mr. Hauptman. Among the pieces are Founding fathers would have wanted to keep CFPB in check (referring to the Dodd-Frank Act, which created the CFPB, as the “Faith in Bureaucracy Act”) and Consumer Financial Protection Bureau proves its critics right. The other new appointees are Consuala “CJ” Jordan, and Julie B. Lindsay.  The Trump team had previously announced the appointment of Paul Atkins.

Adam Levitin: Calls to Fire Cordray are About Shilling for the Financial Industry and to Block Arbitration, Payday Lending Regs

by Jeff Sovern

In a characteristically terrific post at Credit Slips, Georgetown's Adam Levitin explains the real reasons for calls to fire CFPB Director Cordray.  A worthy companion to Adam's recent op-ed at American Banker (free content), What the CFPB 'Commission' Debate Is Really About.   Both worth a read. 

Pamela Foohey Article on Complaints to the CFPB

Pamela Foohey of Indiana has written Calling on the CFPB for Help: Telling Stories and Consumer Protection, 80 Law & Contemporary Problems (Forthcoming). Here is the abstract:

Since it began operating in 2011, the Consumer Financial Protection Bureau (CFPB) has handled more than a million complaints regarding consumer financial product and services. Beginning in June 2015, the CFPB began publishing consumers’ narratives submitted with their complaints. This Article analyses a random sample of 5,000 of these narratives to assess how people engage with the complaint mechanism in light of the CFPB’s role in processing complaints. I find that people predominately use the complaint function for two distinct purposes: to express their anger and frustration about companies’ practices, or to express sadness and fear about how companies’ practices have impacted their lives. When people write with anger and frustration, they typically direct their comments to the subject company, which aligns with the CFPB’s role in processing complaints. In contrast, when people write with sadness and fear, they often plead with the CFPB for individualized help in solving their broader problems. But the CFPB is not equipped to help people on an individual basis and such is not the goal of its complaint mechanism. Identifying that some consumers seem to expect the CFPB to provide this type of assistance presents an opportunity for the CFPB to address the serious problems that these consumers are voicing and to enhance how it utilizes the complaint data to further its goal of consumer protection. However, the CFPB is but one government agency that allows people to write narratives describing their problems. This Article thus provides suggestions for how agencies generally may mine their narrative databases to help people in need and to advance their missions.

Politico: CORDRAY WANTS TO STAY

Report here.  Here's what it says:

 POLITICO's Lorraine Woellert: "Richard Cordray 'has no plans' to leave the top job at the CFPB, the agency said today. 'Director Cordray was confirmed by a bipartisan group of 66 senators to serve a term until July 2018 and has no plans to step down,' CFPB Communications Director Jen Howard said in an email.

"Cordray's future has been the subject of speculation since Election Day, with some industry trade groups pushing for him to be replaced. At the same time, they're asking Congress to rethink the agency's structure, which vests power in a single director. ... Meanwhile, Cordray's public calendar already is filling up, another sign he's sticking around. In March, he's scheduled to appear at a meeting of the National Community Reinvestment Coalition"

How the FTC Demonstrates Why We Need a Strong, Independent, Pro-Consumer CFPB

by Jeff Sovern

The FTC is a terrific agency that has done a lot of good for consumers.  Every FTC staffer I've ever met has impressed me as dedicated to consumer welfare, hard-working, and talented.  And yet, the FTC could do more if it weren't hamstrung by precisely the limits the financial industry and the House Financial Services want to impose on the CFPB.  Two examples of what more it could do: first, though the Dodd-Frank Act gave the FTC the power to issue regulations governing auto dealer in section 1029, the FTC hasn't used that power.  In contrast, during the six years since that Act was enacted, the CFPB started up and has issued many regulations protecting consumers. Second, the FTC continues to reach consent decrees that permit sellers to describe used cars as "certified" even though the cars have been recalled and the recall repair has not been done.  I wrote about this here, and it happened again last week. Personally, I think it's crazy to expect consumers to check to see if their certified car has been recalled or even to read disclosures closely enough to discover that certified does not mean the car is safe; surely consumers paying extra for a certified car are doing it at least in part because they think they are getting a safe car.

So why doesn't the FTC do more?  I suspect it's because the FTC is saddled with a commission-structure--which is often a recipe for gridlock--and is subject to the congressional appropriations process.  That gives industry lobbyists a lot of power to urge members of Congress to cut the FTC's budget if it doesn't do what the lobbyists want--and much of that is too much "inside baseball" to draw the attention of the media or voters, with the result that countervailing arguments are not given enough attention.  Congress has shown a willingness to whack the FTC when it thought the FTC was protecting consumers too aggressively.  Commissioners would be wise to eschew battles with Congress over controversial items and devote Commission resources to attacking practices that are universally-condemned, rather than draw industry ire and risk being deprived of any resources to aid consumers.  But the result is that the FTC is less protective of consumers than it could be.

The CFPB could still help consumers even if it starts to look like the FTC.  But consumers would be far better off if the FTC started to look more like the CFPB.

House "Freedom Caucus" Asks Trump to Kill CFPB Proposed Arbitration Rule; Is Freedom Just Another Word for Tricking/Trapping Consumers?

WSJ report here (behind paywall). The Caucus consists of 40 members.  The article reports that they seek rollback of 200 rules, but they anticipate that the number will rise. 

Am. Banker: Trump vs. Cordray: The Battle Ahead

Here (free content). The entire article is worth a read, but here are some highlights:

J.W. Verret, an associate law professor at George Mason University School of Law, listed some reasons why he thinks Cordray could be removed for cause: allegations of employee discrimination and retaliation at the CFPB, and a settlement with auto lender Ally Financial that some allege was a false claim.

Others see that as a stretch.

"I don't think there is anything that Director Cordray has done that would constitute cause," [co-blogger Public Citizen's Scott] Nelson said. "Cause doesn't mean you disagree with a person's policies; cause is considered to mean malfeasance."

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"It's important for people who are fighting for consumers to clearly draw the lines that Trump has said he sides with regular Americans against special interests," said Paul Bland, the executive director at the public interest law firm Public Justice.

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[As for the CFPB's pending motion for an en banc hearing in the PHH case, that case] could potentially be decided by 11 judges: four appointed by President Obama, four by former President George W. Bush and three by former President Bill Clinton.

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."The banks are convinced Trump is totally in their pocket, but I think Trump has surprised many of us and is not as predictable a figure as George W. Bush," said Deepak Gupta, the founding principal of Gupta Wessler and a former CFPB senior litigation counsel. "I hold out optimism that legislation does not go through and there is a realistic path for the D.C. Circuit to act just in time for Cordray to leave just before his term expires in 2018."