Despite speculation that its powers may be watered down under the incoming administration, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) is showing no signs of dialing back its investigative activities at this time. Within the past few weeks, the CFPB instituted federal actions to enforce civil investigative demands (“CIDs”) served on Harbour Portfolio Advisers, LLC (“Harbour”), National Asset Advisors, LLC (“NAA”), National Asset Mortgage LLC (“NAM”), and Zero Parallel, LLC (“Zero Parallel”).
On November 29, the CFPB sued in the Eastern District of Michigan to compel Harbour, NAA, and NAM to respond to CIDs issued as part of an investigation into potential violations of the Truth in Lending Act and other consumer finance laws. The CFPB petition alleges that Harbour “has purchased foreclosed properties in bulk and has resold them to consumers through agreements for deed, also known as land contracts,” with marketing and loan-servicing support from NAA and NAM. Two days later, the Bureau filed a petition to enforce a CID against Zero Parallel in the Central District of California. The petition alleges that Zero Parallel, which allegedly “obtains consumer-loan applications from online advertisers and then sells the loan applications to purchasers that include payday and other small-dollar lenders,” rescinded a prior agreement to produce materials requested by the CFPB as part of an investigation into whether payday loans violated the Consumer Financial Protection Act of 2010.
Both courts promptly issued orders to show cause as to why the Bureau’s petitions should not be granted, but the companies are not required to respond until the new year and it is difficult to predict what will become of these and other CFPB investigations. In addition to potential changes in the Bureau’s structure and strategy from the incoming administration, there are looming questions about the scope of the CFPB’s investigative powers. Earlier this year, a Washington, D.C. District Court judge held that the CFPB lacked authority to issue a CID to an accreditor of for-profit colleges and cautioned the Bureau to “be especially prudent before choosing to plow head long into fields not clearly ceded to [it] by Congress.” CFPB v. Accrediting Council for Independent Colleges & Schools, --- F. Supp. 3d ----, 2016 WL 1625084 (D.D.C. Apr. 21, 2016). The issue was appealed to the D.C. Circuit, which is expected to hear argument in February 2017.