EDITORIAL
Enforcement and litigation directed at the consumer financial services industry is expected to increase under the Biden administration. While increased enforcement is likely to occur with respect to all federal agencies, the most significant increases are being forecast in the areas of fair lending enforcement, which was relatively subdued under the Trump administration.
On Jan. 20, 2021, his first day in office, President Biden announced CFPB veteran David Uejio as the Acting Director of the Bureau, who made it clear that he intended to immediately ramp up enforcement activity. Shortly after being appointed, Acting Director Uejio spoke in a blog post of intensifying the efforts to protect the “economically vulnerable”, promised more aggressive supervision, and indicated he intends to focus on fair lending and COVID-19 relief.
President Biden announced in January that he planned to nominate Rohit Chopra for Director of the CFPB. The nomination was submitted to the Senate in mid-February and Chopra is expected to be confirmed. Chopra is currently serving as a Commissioner on the Federal Trade Commission. Chopra is expected to maintain Ueijo’s tough approach to enforcement, as evidenced by his work at the FTC. Chopra has also suggested that the CFPB should write regulations governing collection practices of creditors in addition to those of third-party debt collectors, which the agency addressed in rulemaking last year.
As suggested by Uejio, many consumers are experiencing financial strain due to the COVID-19 pandemic, which is placing debt-collection and lending practices under the spotlight and could lead to increased enforcement and rulemaking. Specifically, commentators expect the CFPB to increase its focus on fair auto finance, underwriting, and pricing, as such issues were areas of focus under the Obama administration. Indeed, since Biden took office, we’ve already seen the CFPB launch at least one investigation into vehicle and payment protection products, credit reporting policies and procedures, and reporting records. We have also seen the CFPB launch an investigation targeting fund-transfers and the collection practices of a well-known mobile-money transfer company, confirming financial technology is also being closely monitored by the bureau. Finally, many are forecasting that the payday lending industry will also come under increased scrutiny. (Please note that the articles hyperlinked in this paragraph may require subscription to access.)
Given the likelihood of increased fair lending enforcement in the Biden administration, financial services institutions should keep abreast of developments in the regulatory landscape and review their fair lending policies and procedures to ensure compliance with applicable laws and regulations. For more information, please contact Erin Sedmak.
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Ms. Sedmak focuses her practice in defense litigation in the financial and insurance industries but her practice is not limited to those fields. Ms. Sedmak has represented corporate, individual, and governmental interests in litigation, including representing municipalities in tax disputes. Ms. Sedmak’s financial-industry practice focuses on defending individual and class-action litigation, including claims under the FDCPA and FCRA. Ms. Sedmak’s insurance experience includes first- and third-party matters, including advising a major insurance company with respect to claims arising from the Flint Water Crisis. Ms. Sedmak is comfortable working on all aspects of pre-trial matters, including written discovery, conducting depositions, drafting and arguing motions, negotiating settlement, and counseling her clients.
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