CFPB Opens Comment Period on CIDs

The Consumer Financial Protection Bureau has opened the comment period on its review of the Civil Investigative Demand process through which the agency investigates companies alleged to have violated consumer protection laws.

Comments on the process must be filed by March 27.

Mick Mulvaney, the acting director of the CFPB, announced earlier this month that the agency would be reviewing all of its policies and procedures, starting with CIDs. Attorneys spoke out, mentioning some of the issues they have with the CID process, namely that they are overly broad, too demanding, and impossible to defend against. The CFPB is seeking specific information about the formulation, issuance, or modification of CIDs, including the “cost information or information concerning alignment with the processes of other agencies with similar authorities.”

“The Bureau understands, however, that responding to a CID can impose burdens on the recipients,” the CFPB noted in summarizing why it is soliciting comments.

Among the areas in which the CFPB is seeking feedback are:

1. The Bureau’s processes for initiating investigations, including 12 CFR 1080.4’s delegation of authority to initiate investigations to the Assistant Director of the Office of Enforcement and the Deputy Assistant Directors of the Office of Enforcement
2. The Bureau’s processes for the issuance of CIDs, including the non-delegable authority of the Director, Assistant Director of the Office of Enforcement, and the Deputy Assistant Directors of the Office of Enforcement to issue CIDs
3. Specific steps that the Bureau could take to improve CID recipients’ understanding of investigations, whether through the notification of purpose included in each CID or through other avenues, including facilitating a better understanding of the specific types of information sought by the CID
4. The nature and scope of requests included in Bureau CIDs, including whether topics, questions, or requests for written reports effectively achieve the Bureau’s statutory and regulatory objectives, while minimizing burdens, consistent with applicable law, and the extent to which the meet and confer process helps achieve these objectives
5. The timeframes associated with each step of the Bureau’s CID process, including return dates, and the specific timeframes for meeting and conferring, and petitioning to modify or set aside a CID
6. The Bureau’s taking of testimony from an entity, including whether 12 CFR 1080.6(a)(4)(ii), and/or the Bureau’s processes should be modified to make expressly clear that the standards applicable to Federal Rule of Civil Procedure 30(b)(6) also apply to the Bureau’s taking of testimony from an entity
7. The Bureau’s processes for handling the inadvertent production of privileged information, including whether 12 CFR 1080.8(c) and/or the Bureau’s processes should be modified in order to make expressly clear that the standards applicable to Federal Rule of Evidence 502 also apply to documents inadvertently produced in response to a CID
8. The rights afforded to witnesses by 12 CFR 1080.9, including limitations on the role of counsel described in 12 CFR 1080.9(b) in light of the statutory delineation of objections set forth in 12 U.S.C. 5562(c)(13)(D)(iii)
9. The Bureau’s processes concerning meeting and conferring with recipients of CIDs, including, for example, negotiations regarding modifications and the delegation of authority to the Assistant Director of the Office of Enforcement and Deputy Assistant Directors of the Office of Enforcement to negotiate and approve the terms of satisfactory compliance with civil investigative demands and extending the time for compliance
10. The Bureau’s requirements for responding to CIDs, including certification requirements, and the Bureau’s CID document submission standards
11. The Bureau’s processes concerning CID recipients’ petitions to modify or set aside Bureau CIDs, including:
    1. Whether it is appropriate for Bureau investigators to provide the Director with a statement setting out a response to the petition without serving that response on the petitioner
    2. Whether petitions and the Director’s orders should be made public, consistent with applicable laws
    3. The costs and benefits of the petition to modify or set aside process, vis-à-vis direct adjudication in Federal court, in light of the statutory requirement for the petition process and the fact that CIDs are not self-enforcing