Knowledgeable Litigation Lawyer in Milwaukee Sheds Light On CFPB
Senator Ted Cruz (R-TX) and Representative John Ratcliffe (R-TX) introduced companion bills in the U.S. Congress on February 14, 2017, to abolish the Consumer Financial Protection Bureau (CFPB). As many business leaders know, the CFPB is a federal agency responsible for consumer protection in the financial sector. CFPB’s jurisdiction is quite broad. It governs banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors, and other financial companies operating in the United States. Created in 2010 in response, at least in part, to the 2007-2008 financial crisis, the CFPB is said to be the bane of many businesses’ existence. Will it survive?
CFPB’s Reach is Broad
Senator Cruz and Representative Ratcliffe have echoed the concerns stated by many businesses that the CFPB’s reach is unreasonably broad. For example, while the Bureau is supposed to monitor and go after “unfair” acts and practices, all too often it targets mere administrative glitches.
Many in the financial sector are aware that when MasterCard attempted to bring UniRush – a prepaid card issuer – onto the MasterCard Payment Transaction Services platform in October 2015, some UniRush users were temporarily unable to gain access to their funds. There was, of course, no evidence that either firm sought to deceive anyone. The problem was rectified fairly quickly.
Nevertheless, the CFPB claimed that the snafu fell within the Bureau’s authority to penalize unfair, deceptive, and abusive acts and practices under the Dodd-Frank Act. Facing what some business leaders thought amounted to legal extortion, MasterCard and UniRush caved in and agreed to a consent order requiring them to pay $10 million in consumer restitution and $3 million in civil penalties.
The effect of the CFPB action was to take what amounted to a straightforward systems conversion problem and convert it into a violation of the Dodd-Frank Act.
Financial Companies Remain Vulnerable
Legal experts are left wondering that if this sort of broad definition of “unfairness” has now been read into Dodd-Frank, it might be similarly be “read” into other situations that are regulated by other federal agencies. On the one hand, it is certainly recognized that “to err is human.” On the other, an innocent error can apparently now be the basis for significant legal liability.
Future of the Cruz-Ratcliffe Legislation
Political experts caution that before business leaders purchase funeral palls for the CFPB, they should gauge whether the proposed legislation will make its way successfully through an anticipated Senate filibuster. Some experts say something short of out-right abolishment may be the solution. In any event, those within the financial sector must live with a myriad of regulations and an aggressive agency that smells blood in the water.
Milwaukee Financial, Business, and Commercial Litigation Attorneys
The Milwaukee business litigation firm of Kerkman Wagner & Dunn has more than 50 years of combined legal experience representing financial firms, business owners, and others in all sorts of commercial litigation in Wisconsin. We have worked with clients in a number of consumer protection cases and have the skills and know-how to represent your interests aggressively. We excel not only in federal issues, but also in handling issues related to Wisconsin’s broad consumer protection laws. Our firm has big firm talent and provides small firm attention. Call us at 414-278-7000 or complete our online contact form.