Non-bank financial institutions are facing a double whammy, courtesy of the Consumer Financial Protection Bureau (CFPB).
- A new federal registry — liable to be accessible on the Internet after its launch — will list “corporate offenders that have broken consumer laws.”
- Companies facing court orders related to consumer fraud violations must notify the CFPB so they can be added to the registry.
The registry will include companies that agree to consent orders as part of settlements and admitted to no legal wrongdoing. The CFPB hopes to put the registry online eventually so that the public can keep tabs on accused offenders. Records of court orders against non-bank entities are available, but not all in one registry as the bureau seeks to launch.
“[F]raudsters and scam artists get caught in one part of the country and restart their scheme in a new place hoping to not get caught again,” says CFPB chief Rohit Chopra. “Too many American families have been harmed by corporate repeat offenders [such as payday lenders] in a rinse-and-repeat cycle of illegality, where bad actors see fines and penalties as the cost of doing business.”
Consumer Registry Rule Final in September
The final rule, Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders, requires non-bank “covered persons subject to certain final public orders obtained or issued by a government agency in connection with the offering or provision of a consumer financial product or service to report the existence of the orders and related information to a Bureau registry.”
CFPB can also require the non-banks to file annual reports regarding their compliance with court orders. The rule is effective September 16, barring adverse comments. Its publication in the Federal Register is pending. The Chamber of Commerce and other business groups are suing in federal court to stop the rule which they argue will pose burdensome compliance costs to businesses.
