Navigating an Investigation

 The CFPB has a broad grant of jurisdiction over companies that offer or provide consumer financial services or products. This includes, among others, companies that offer or service credit cards, debt collectors, consumer debt, mortgages, as well as banks, consumer reporting agencies, payday lenders and lead generators. Additionally, the CFPB has the authority to hold individuals liable, as well as corporations. The CFPB may also refer any wrongful conduct to the Department of Justice (DOJ) on the part of individuals. Here are a few suggestions on how to address a Civil Investigative Demand (CID) from the CFPB:

There are many possible reasons for receiving a CID. The CFPB receives and aggregates data from consumer complaints filed with the Bureau. These complaints alert the Bureau to marketing and business practices that may be causing consumer harm. The CFPB regularly conducts supervisory examinations that inform it as to potentially unfair, deceptive, or abusive practices in the marketplace. The CFPB also shares information and cooperates with other federal and state regulatory bodies that may alert the CFPB to acts and practices that are potentially causing harm to consumers.
Read the CID from start to finish. Take careful notice of the CID's stated notification of purpose, requests for documents and information, and applicable time period. When conducting this review, you should begin to make initial assessments as to the burden associated with responding to the CFPB's requests. Your counsel must also contact the enforcement officer identified on the CID within 10 days to set up the "meet and confer."

We highly recommend you seek out an attorney who has experience with the CFPB to help you make these initial assessments. Not only does such an attorney provide you with important strategic insight, experience and credibility, but bringing in outside counsel also demonstrates to the CFPB that you are taking its requests seriously. According to CFPB Senior Counsel for Enforcement Policy and Strategy Greg Nodler, a panelist at Holland & Knight's Half-Day Seminar on Oct. 6, 2015, the CFPB looks favorably upon companies that take the Bureau's CIDs seriously. The way a company can demonstrate this includes attending the meet and confer in person, having internal IT staff participate in the meet and confer to work out technical details with producing information and being cooperative throughout the life of the investigation.
A general counsel or an assistant in charge of litigation or governmental disputes is an integral part of an effective team and should be facilitating the exchange of information between the company, outside counsel and the CFPB. At the outset, the team should attempt to compellingly educate the CFPB staff as to how the business operates, as well as any history that may be relevant to the company's receipt of the CID.
Responding promptly and meaningfully to consumer complaints and addressing any trends identified through those complaints can help a company stay off of the CFPB's radar. Having a robust and effective compliance management system can help create such a process. Additionally, if you have received a CID, having a comprehensive compliance management system will help demonstrate to the CFPB that the company is taking steps to avoid consumer harm.
The CFPB is an aggressive agency that has exacted large financial penalties from companies. The CFPB may also require that companies make material changes to their business practices. Additionally, if you receive a CID and do not comply, the CFPB may bring suit to enforce the CID in federal court. CIDs are initially confidential, but any such suit to enforce the CID would be public.
Legal Disclaimer: The above information is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we highly recommend you seek out an attorney who has experience with the CFPB to help you make these initial assessments.