Guest Editorial – Actions Speak Louder Than Words

Guest Editorial

By Eric L. Johnson*

November 2019 – One of my all-time favorite sayings is “actions speaker louder than words.” In other words, what you do has a stronger impact on people than what you say.

I can think of no better application of that maxim than to the Consumer Financial Protection Bureau’s actions since Director Kraninger took over at the Bureau. Let me explain.

You may remember that, in April, the new CFPB director outlined her vision for the Bureau in a speech at the Bipartisan Policy Center. As I wrote at the time, her remarks appeared to signal a continued shift in the Bureau’s emphasis from using enforcement actions as its primary tool to keep bad actors in check towards the use of the Bureau’s other tools-education and supervision.

Specifically, she stated that the Bureau would no longer be engaging in rulemaking through its enforcement actions. She stated that the focus of the Bureau’s enforcement tool would be on preventing consumer harm. She further stated that the CFPB would conduct rigorous economic and market analysis in the rulemaking process. Rulemakings wouldn’t be rushed, and they would proceed deliberately and transparently.

She also confirmed her view that supervision is the “heart” of the CFPB. At the time, she indicated that she is focused on ensuring that the Bureau uses this tool as effectively and efficiently as possible to prevent consumer harm.

She also stated that the Bureau would ensure that enforcement investigations proceed carefully and purposefully to allow for a fair and thorough evaluation of the facts and the law. The Bureau would hold bad actors accountable and may in some cases engage in a public enforcement action when needed to “send a clear message” to the marketplace to deter unlawful behavior and support a level playing field.

Ok, so that’s what she said back in April. But what actions has the Bureau actually taken since then? It was reported recently that the Bureau has ratcheted up investigations and enforcement actions. Companies are receiving more civil investigative demands and notices alerting them to the possibility of an enforcement action. The director has denied at least nine petitions to modify or set aside civil investigative demands since she took over the helm.

That’s been our experience as well. Our firm’s Government Investigations, Examinations, and Enforcement practice group has been very busy so far this year. The Bureau appears to be bringing the same types of cases against the same types of parties and with the same types of settlement demands as under prior directors. It’s been business as usual for the Bureau, notwithstanding the director’s comments. A review of the CFPB’s enforcement actions so far this year (20) notes that the number of actions it brought in 2019 has increased more than 80% over those brought in 2018.

Does that mean that Director Kraninger’s comments may be rhetoric rather than an actual change? She recently told a group of used car dealers that the Bureau has no plans to regulate by enforcement. But, is that true? Let’s look at a couple of the CFPB’s recent actions that appear to go against some of the director’s comments.

Example #1: Declaring that it is an unfair practice to allow repossession agents to charge customers for removing, inventorying, storing, and returning personal property found in repossessed cars, even if state law permits these types of charges.

Example #2: Declaring that it is an unfair practice to allow a vendor to charge a fee to take a phone payment, without first telling the customer about all alternative methods of payment that have no fee or a lower fee, even though the customer was told the fee after stating a payment method preference and expressly agreed to the fee.

These are just two examples where the Bureau’s actions certainly appear to be speaking louder than the director’s words, and I’m sure there are more. So, what can you do? You can and should still listen to what the director and others at the CFPB are saying; those statements are important to hear.

More importantly however, is to watch and track their actions – who are they enforcing against, what actions are they taking, and whether they are continuing to push the envelope as in the past.

Don’t be lulled to sleep by the nice words you may hear from the director and others at the Bureau. Their actions will tell you far more about the types of practices they may find objectionable than any words that may pass through their lips.