The Consumer Financial Protection Bureau (“CFPB” or “Bureau”)
posted its semiannual update regarding the Bureau’s rulemaking agenda.
The Spring 2016 agenda contains an overview and timetable for the CFPB’s
current initiatives. We have provided an overview of the most significant
The Bureau issued a Notice of Proposed Rulemaking on May 5, 2016, covering
the use of arbitration agreements containing class action waivers in consumer
financial services contracts. The proposed rule would prohibit covered
providers of certain consumer financial products and services from using
class action waivers to prevent customers from filing or participating
in class action litigation to resolve disputes. This follows a study on
arbitration issued by the Bureau to Congress in March 2015, as was mandated
under Dodd-Frank. The Bureau convened a Small Business Regulatory Enforcement
Fairness Act (“SBREFA”) panel to consult with small business
that may be affected by the policy proposals. A final rule is not expected
until summer of 2017.
Payday, Auto Title, and “Short-Term” Lending Products
The Bureau intends to release a Notice of Proposed Rulemaking to address
consumer harms from payday loans, auto title loans, and other similar
credit products. The rule is expected to introduce ability to repay and
non-ability to repay options that will impose restrictions on loan structures
and additional verification requirements. This rulemaking follows an April
2015 meeting between a SBREFA panel, Office of Management and Budget,
the Small Business Administration’s Chief Counsel for Advocacy and
small lenders that may be affected by the proposed new rules. The rulemaking
adds to the Bureau’s research on these consumer products, online
lenders’ debiting practices, and the Bureau’s ongoing analysis.
Prepaid Debit Cards and Accounts
The CFPB plans to issue a final rule to create a comprehensive set of protections
for prepaid financial products, which includes prepaid debit cards and
other general-purpose “reloadable” accounts. The Bureau issued
a proposed rule in November 2014 to create specific provisions to include
prepaid accounts within the scope of the Electronic Fund Transfer Act
and it’s implementing Regulation E as prepaid accounts. The Bureau
further proposes to amend certain provisions of Regulation E and Regulation
Z to regulate such accounts requiring that prepaid cards with overdraft
service and credit features follow many of the rules governing credit cards.
The Bureau expects to issue a final rule in 2016 to revise certain mortgage
servicing rules contained in the Bureau’s December 2014 proposal.
That plan addressed updated loss mitigation requirements and compliance
with certain standards relating to when the borrower is a potential or
confirmed successor in interest or when the borrower is in bankruptcy.
Know Before You Owe Amendments
The Bureau also expects to issue a Notice of Proposed Rulemaking this summer
that will clarify and provide additional guidance regarding the federal
mortgage disclosures that consumers receive when applying for and closing
a mortgage loan under the Truth in Lending Act (“TILA”) and
the Real Estate Settlement Procedures Act (“RESPA”).
Overdrafts on Checking Accounts
The CFPB issued a white paper in June 2013 and a report in July 2014 on
checking overdraft services. The white paper compiled information from
administrative data about overdraft practices of several of the larger
banks. The paper touched on several key issues, including how consumers
participate in overdraft coverage limits; insufficient funds fee structure,
and involuntary account closures. The new information provides the Bureau
with data on how overdraft coverage is offered and the amount of transactions
that fall under overdraft protection. The Spring 2016 agenda states that
the Bureau will continue to engage in pre-rule making activities and conduct
additional research in preparation for pre-rule activities.
Debt Collection Practices
The Bureau issued an Advanced Notice of Proposed Rulemaking in November
2013 seeking comment and data regarding debt collection practices. The
Bureau states that for the Spring 2016 agenda it is in the process of
analyzing responses and is engaged in qualitative testing to determine
“what information would be useful for consumers to have about debt
collection and how that information should be provided to them.”
While the Fair Debt Collection Practices Act (FDCPA) offer protections
to consumers from unfair or deceptive collection practices, no federal
agency had authority to regulate the industry before the CFPB was formed.
The Bureau must conduct other pre-rule activities, including convening
a SBREFA panel, before issuing a proposed rule. The agenda does not provide
an estimate of when such pre-rule activities will occur.
The CFPB is continuing other efforts with regard to implementing consumer
protections that were mandated under the Dodd-Frank Act. The Bureau has
been gradually releasing rules and regulations for the mortgage, credit,
and other financial markets. The protections are meant to safeguard consumers
and provide more oversight to an industry that is still recovering from
the economic crisis of 2008. The Bureau announced that other potential
long-term initiatives include rulemakings that will address credit reporting
and student loan servicing.
Contact Geraci Law Firm at (949) 298-8050 today, or
contact Jenny Park directly for more information.