Compliance Blog

Written by Steve Van Beek

With a new regulator (the CFPB), come new regulatory powers.  One of these new powers is the Civil Investigative Demand (CID) which acts like a subpoena request for information.  In short, Dodd-Frank authorizes the CFPB "to conduct investigations to ascertain whether any person is or has been engaged in conduct that, if proved, would constitute a violation of any provision of Federal consumer financial law."  

The CFPB has issued a final regulation that govern their investigations - 12 CFR 1080.  

The CFPB's ability to issue a CID is not limited solely to institutions under its primary enforcement powers.  Even if your credit union is less than $10 billion in assets - the CFPB could issue you a CID.  Here is from a September CFPB blog post:

"The mission of the CFPB is to ensure compliance with federal consumer financial laws through effective enforcement of those laws. When the Office of Enforcement needs to gather information, it may issue a Civil Investigative Demand (CID) to people and institutions that may have materials relevant to an investigation. The law that created the CFPB gives us the authority to gather information this way, and several other federal agencies have similar processes.

We carefully consider what to request in each Civil Investigative Demand. A recipient of a CID may challenge a CID by petitioning the CFPB’s Director. The Director can respond in three ways: he can reaffirm our decision to obtain the information, modify the demand, or set it aside altogether."

As indicated in the quote above, there is a process to appeal a CID.  Unfortunately, the ultimate decision-maker is the Director of the CFPB.  As you can imagine, the current track record for appeals is not good.  The first two have been denied by Richard Cordray and you can find that information here.  

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If your credit union receives a CID - call your attorney.  Quickly.  

Timing.  The CFPB's timeframe only allows 10 days for the credit union to meet, in person, with the CFPB.  12 CFR 1080.6(c).  Additionally, you only have 20 days to petition the CFPB to modify or set aside the CID.  12 CFR 1080.6(d).  And, the petition cannot be a general objection to the CID:  "[s]uch petition shall set forth all factual and legal objections to the civil investigative demand, including all appropriate arguments, affidavits, and other supporting documentation. The attorney who objects to a demand must sign any objections."  Further, if you do not have the "10 day meeting" the CFPB will not allow your petition to modify or set aside the petition to go forward.  Which is what occurred when Next Generation Debt Settlement appealed the CFPB's CID.