Dodd-Frank

Question 1

Background and CFPB creation

Answer 1

Was enacted in 2010. Along with other reforms, Title X created the CFPB as an independent bureau within the Federal Reserve.

CFPB oversees the relationship between consumers and providers of financial products and services. It holds broad authority to examine, write regulations, and bring enforcement actions concerning businesses that provide financial products or services, including service providers.

CFPB has rulemaking authority for specific existing laws related to financial privacy and other consumer issues, such as the FCRA, GLBA and Fair Debt Collection Practices Act.

It has enforcement authority over all nondepository financial institutions, and over all depository institutions with more that $10. Billion in assets.

For depository institutions with assets of $10 billion or less, CFpB promulgates rules, but enforcement power remains with the banking regulators.

The CFPB received authority to enforce against unfair and deceptive acts and practices. In addition, the CFPB also can bring enforcement actions against abusive acts and practices.

Question 2

What is an abusive act or practice?

Answer 2

An act or practice that:

• Materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service or
• Takes unreasonable advantage of:
  • a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service;
  • the inability of a consumer to protect its intersts in selecting or using a consumer financial product or service
  • the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.

Question 3

What can the CFPB do?

Answer 3

CFPB enforcement authority includes the ability to conduct investigations and issue subpoenas, hold hearings, and commence civil actions against offenders.

As of the writing of this book, civil penalties vary from 5,526 USD per day for federal consumer privacy law violations to $27,631 per day for reckless violations and $1,105.241 for knowing violations.

The state attorneys general are authorized to bring civil actions in enforcements of the law or regulations.