The Consumer Financial Protection Bureau has denied a petition from a company to modify or set aside a Civil Investigative Demand, ruling that the company did not file its request in a timely manner, but even if it has, the Bureau does have authority over the company, that the questions about the CFPB’s funding structure are not relevant, and that the inquiry should not be paused even though the company has filed for bankruptcy protection.
The Background: The CFPB served the CID on the company — a real estate brokerage — last August. The CID sought oral testimony related to potential violations of the Consumer Financial Protection Act, Regulation Z, which implements the Truth in Lending Act, and Regulation B, which implements the Equal Credit Opportunity Act.
- A hearing was scheduled for the end of September. Two weeks before the hearing, the company filed for Chapter 11 bankruptcy protection. The CFPB rescheduled the hearing for mid-November. The two sides continued talking until two days before the hearing, when the company said it would not appear and filed the petition to set aside the CID.
The Ruling: The company argued the CID should be modified or set aside because real estate brokerages don’t fall under the CFPB’s purview unless they are offering a financial product or service, which they aren’t, that the automatic stay provisions of the bankruptcy code prohibit any further action from being taken, and that the CFPB can’t proceed because its funding structure is unconstitutional.
- Putting all of those aside for a second, the CFPB denied the petition because the company had 20 days from when it received the CID in August to file it, while the company instead filed it three months later.
- But even on the merits, the CFPB also ruled that the company’s arguments were not sufficient to warrant setting aside the CID.
