Over the last eight months, we have written weekly (and sometimes bi-weekly) blog posts. While some of our articles have applauded efforts of the CFPB, others have been critical of the CFPB. So, we ask the question this week, are we being too hard on the CFPB?
Let’s consider for a moment what the CFPB has tackled in its brief four-year tenure:
- Mortgage origination and servicing abuse
- Foreclosure abuse including “robo-signing”
- Termination of contracts with certain student loan debt collectors
- Overdraft features on pre-paid debit cards
- Unfair, deceptive and abusive debt collection practices
- Payday and title pawn cycle-of-debt transactions.
As a matter of public policy, these CFPB initiatives are important. An argument in favor of the CFPB’s aggressive role is that its visibility is akin to community policing, when the cops get out of their cars, and return to walking the beat to protect the citizenry. Crime goes down and citizens feel safer. We think this is a nice analogy.
Having said this, the cop on the block is assigned the duty of serving and protecting against criminal law abusers; and criminal law is fairly well understood by law abiding citizens. The same cannot always be said of the issues that the CFPB has begun to focus upon—including Mandatory Pre-Dispute Resolution (Arbitration) and UDAAPs (Unfair, Deceptive or Abusive Acts or Practices). Business practices and procedures can now result in civil money penalties when the CFPB determines that the same are UDAAPs. And, faulty studies with pre-determined findings are being hailed as definitive evidence that arbitration harms consumers.
Such is the breadth of the discretion of the Bureau. And, that is what many find troubling.