The Consumer Financial Protection Bureau has issued a proposal under which it would supervise nonbank providers
of consumer reporting and consumer debt collection services considered to be
"larger participants" in the markets for those services.
The proposal defines as "larger participants" companies
with more than $7 million in annual receipts from consumer reporting and
companies with more than $10 million in annual receipts from debt collection.
Comments on the proposal are due by April 17, 2012.
Companies likely to qualify as larger participants should
promptly review their practices and procedures for federal law compliance with
experienced counsel in anticipation of CFPB examinations, which are expected to
begin this summer. Lawyers in Ballard Spahr's Consumer Financial Services Group
are currently assisting clients in preparing for the expected CFPB
The CFPB's larger participant supervision program will
represent the first time that nonbank companies engaged in consumer reporting
or debt collection are subject to examination for federal law compliance by a
federal regulator. In addition to examining their compliance with federal laws
such as the Fair Credit Reporting Act, the Fair Debt Collection Practices Act,
and the Electronic Fund Transfer Act, such companies should expect the CFPB to
scrutinize their practices under "unfair, deceptive or abusive" standards.
Under the Dodd-Frank Wall Street Reform and Consumer Protection
Act, the CFPB has authority to supervise, regardless of size, nonbank providers
of residential mortgage loans and certain related services, payday loans, and
private education loans. The Dodd-Frank Act also gave the CFPB supervisory
authority over nonbank providers considered to be "a larger participant of a
market for other consumer financial products or services."
Highlights of the proposal, published on February 17,
According to the background discussion, the CFPB
anticipates further rulemaking to define larger participants in other markets.
In its notice published in June 2011 soliciting comments for developing the
proposal, the CFPB had identified six potential markets in which "larger
participants" would be subject to CFPB supervision. In addition to debt
collection and consumer reporting, those markets are (1) consumer credit and
related activities, (2) money transmitting, check cashing, and related
activities, (3) prepaid cards, and (4) debt relief services. The CFPB has not
indicated when further rulemaking to define larger participants in other
markets is likely to occur. The CFPB has until July 21, 2012, to issue an
initial final rule defining larger participants.
Ballard Spahr's Consumer Financial Services Group is
nationally recognized for its guidance in structuring and documenting new
consumer financial services products, its experience with the full range of
federal and state consumer credit laws throughout the country, and its skill in
litigation defense and avoidance (including pioneering work in pre-dispute
The group also produces the CFPB Monitor, a
blog that focuses exclusively on important CFPB developments. To subscribe, use
the link provided to the right.
For more information, please contact Practice Leader Alan
S. Kaplinsky, 215.864.8544 or firstname.lastname@example.org;
Practice Leader Jeremy T. Rosenblum, 215.864.8505 or email@example.com; John
L. Culhane, Jr., 215.864.8535 or firstname.lastname@example.org;
Mercedes K. Tunstall, 202.661.2221 or email@example.com;
Christopher J. Willis, 678.420.9436 or firstname.lastname@example.org;
Barbara S. Mishkin, 215.864.8528 or email@example.com;
or Mark J. Furletti, 215.864.8138 or firstname.lastname@example.org.
Copyright © 2011 by Ballard Spahr LLP
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general informational purposes only, and you are urged to consult your own attorney
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