News: In the News

More companies challenging CFPB enforcement actions

Kate Berry, American Banker

WASHINGTON — The Consumer Financial Protection Bureau racked up an impressive track record related to enforcement actions between its formation in 2011 and 2015, winning 122 cases without losing a single one.

But that unblemished record has come to an abrupt end. More companies and individuals are challenging the CFPB's authority, inspired in part by a successful suit by the nonbank mortgage lender PHH Corp. as well as a feeling that the agency has overplayed its hand.

The PHH case represents the first serious constitutional challenge to the bureau's structure. Yet several other cases are now winding their way through the courts, most filed by individuals who were sued by the CFPB and refused to settle.

Ever since the first days of the CFPB's enforcement actions, some small nonbank companies were willing to challenge the agency. Yet they had a difficult time in winning a case or often even a successful motion.

But in recent months, a few cases have gone against the CFPB. Earlier this month, for example, a district court judge dismissed a lawsuit that the CFPB filed against the payment processor Intercept Corp., based in Fargo, N.D., and harshly criticized the bureau for failing to present enough evidence. Those losses have steep consequences for the agency.

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