CFPB to Dig Deeper in Investigations Under New Policy

The Consumer Financial Protection Bureau announced changes to its policies regarding Civil Investigative Demands (CIDs) on Tuesday in order to, “ensure they provide more information about the potentially wrongful conduct under investigation,” according to an announcement press release.

A Civil Investigative Demand is a mechanism used by both state and federal investigators to collect information and evidence for use within the context of a civil investigation, which – if it progresses to a trial and verdict – can ultimately involve monetary penalties levied by a court at the party determined to have committed an offense.

The Bureau’s authority to issue CIDs was established in 2010’s Dodd–Frank Wall Street Reform and Consumer Protection Act, signed into law by President Barack Obama in July 2010. The law specifies that each issued CID “shall state the nature of the conduct constituting the alleged violation which is under investigation and the provision of law applicable to such violation,” according to the CFPB.

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“Consistent with the updated policy, CIDs will provide more information about the potentially applicable provisions of law that may have been violated,” the press release reads. “CIDs will also typically specify the business activities subject to the Bureau’s authority.”

For investigations that require a greater level of determination concerning whether or not it falls under the CFPB’s authority, Bureau staff may include the issue of Bureau jurisdiction in the CID in order to foster further transparency, the release said.

The new policy descends from both recent court decisions about notifications of purpose, and aligns with a previous recommendation made by the Office of the Inspector General in 2017 which emphasized the “importance of updating Office of Enforcement policies to reflect such developments,” the release said.

The new policy is also described by CFPB as consistent with comments the Bureau received in response to feedback the agency sought about various aspects of its operations, including its use of CIDs in investigations that determined if enforcement actions against financial institutions were necessary.

Outlining her vision for the CFPB under her leadership in a speech last week, the Bureau’s incumbent Director Kathleen L. Kraninger outlined four primary pillars she intends to focus the aims of the agency on while she is in its primary leadership position.

She intends to focus on preventing harm to consumers by empowering them, educating them, ensuring clear rules by which financial institutions should operate, and ensuring a culture of compliance through supervision. She also said, however, that enforcement actions should be used cautiously, and only on those institutions that demonstrate a clear intention not to comply with the law.

For more on the CFPB’s policy shift regarding CIDs, read its official press release.

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