Publication

More companies challenging CFPB enforcement actions

Ari Karen in the American Banker

Kate Berry, American Banker

WASHINGTON — The Consumer Financial Protection Bureau racked up an impressive track record related to enforcement actions between its formation in 2011 and 2015, winning 122 cases without losing a single one.

But that unblemished record has come to an abrupt end. More companies and individuals are challenging the CFPB's authority, inspired in part by a successful suit by the nonbank mortgage lender PHH Corp. as well as a feeling that the agency has overplayed its hand.

The PHH case represents the first serious constitutional challenge to the bureau's structure. Yet several other cases are now winding their way through the courts, most filed by individuals who were sued by the CFPB and refused to settle.

"It used to be you had to be either really brave or crazy to challenge the CFPB, but now I don't think you have to be either," said Ari Karen, a partner at Offit Kurman. "Now it's not just the outliers anymore. The ground the CFPB was on just a year ago was solid and safe, and now it's become rocky and unclear. "

Ever since the first days of the CFPB's enforcement actions, some small nonbank companies were willing to challenge the agency. Yet they had a difficult time in winning a case or often even a successful motion.

But in recent months, a few cases have gone against the CFPB. Earlier this month, for example, a district court judge dismissed a lawsuit that the CFPB filed against the payment processor Intercept Corp., based in Fargo, N.D., and harshly criticized the bureau for failing to present enough evidence. Those losses have steep consequences for the agency.

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ABOUT ARI KAREN

akaren@offitkurman.com | 240.507.1740

Ari Karen is an experienced litigator and speaker who has focused his practice in representing financial institutions in both government investigations and litigation before state and federal trial and appellate courts nationwide.

Mr. Karen's practice is diverse, representing clients on matters concerning banking regulations, Dodd Frank financial reform laws, contractual disputes, employment and labor statutes, wage-hour class actions, employment discrimination and fair lending matters, whistleblower complaints and non-competition claims, among others.

 
 
 
 

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 135 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our eleven offices serve individual and corporate clients in the Virginia, Washington, DC, Maryland, Delaware, Pennsylvania, New Jersey, and New York City. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

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