CFPB Report March 7, 2014
CFPB Releases Service Member Complaint Snapshot
On Thursday, March 6, 2014, the CFPB announced the agency had recovered more than $1 million for service members, veterans, and their families who filed grievances about financial products or services. According to the CFPB’s second snapshot of complaints from military-related consumers, which reported the payout, some military families are not receiving the added consumer protections they have been granted. The report covers more than 14,000 complaints from servicemembers, veterans, and their families received by the CFPB from July 21, 2011 through February 1, 2014. According to the report, the top three complaints by servicemembers, veterans, and their families are mortgages, debt collection, and credit cards.
“Military families make enormous sacrifices for our nation and deserve to be protected,” said Director Cordray. “I am pleased that the Bureau has assisted thousands in cutting through red tape when dealing with their financial institutions. However, the complaints show that many servicemembers, veterans, and their families are not getting the protections accorded to them by federal laws and that raises concern.”
Republicans Probe CFPB on Personnel Complaints
On Thursday, March 6, 2014, House Financial Services Committee Chairman, Jeb Hensarling (R-TX), Financial Institutions & Consumer Credit Subcommittee Chairwoman Shelley Moore Capito (R-WV), and Oversight & Investigations Chairman Patrick McHenry (R-NC) requested detailed information from the CFPB about how employees are evaluated and the management of personnel complaints. The members referenced an American Banker article outlining racial disparities at the Bureau, a potentially unfair work environment, and the process by which the Bureau handles employee complaints. The story quotes Bureau employees who point to hypocrisy in the CFPB’s use of disparate impact theory, while revisiting concerns from 2013 about the agency’s difficulty retaining employees.
House Members Send Letter to CFPB Requesting Investigation of Payroll Cards
On Thursday, March 5, 2014, Rep. Cheri Bustos (D-IL), with 68 fellow Members of the House of Representatives, sent a letter to Director Cordray requesting an investigation into the use of payroll cards by employers. The members note the growing use of payroll cards in lieu of direct deposit or paper paychecks, and criticize the fees often associated with such products. Rep. Bustos and her colleagues also note low-to-middle-income individuals often use these products, and are unable to afford reductions in their take-home pay as a result of product fees.
“We respectfully urge you to further investigate this disturbing practice, and at the very least ensure that employers are complying with current federal regulations, by providing conspicuous notice to employees as to their options of how they may receive their paycheck, and in the case of using payroll cards, by providing the employee with an upfront list of all associated fees,” Rep. Bustos wrote.
Last year, the CFPB issued a bulletin reminding employers of federal law prohibiting payroll cards as the sole option to receive wages.
House Science Committee Holds Hearing on Data Security
On Thursday, March 6, 2014, a joint hearing entitled: “Can Technology Protect Americans from International Cybercriminals?” was convened by the House Committee on Science, Space, and Technology; the Subcommittee on Research and Technology; and the Subcommittee on Oversight. The hearing examined the state of technology and standards to protect consumers from cybercrime, and addressed the evolution of cyber-attacks.
Subcommittee on Oversight Chairman Paul Broun (R-GA), spoke about the rise in data breaches, saying, “It seems like an epidemic, and the clear implications of people’s privacy being violated concerns me greatly.” He noted most data breaches do not occur at financial institutions, referencing a decline in the financial damage of such breaches. The Chairman of the Research and Technology Subcommittee, Larry Bucshon (R-IN), highlighted the national security risk posed by breaches in data security, referencing two bills originated in the Committee and passed by the House last year: The Advancing America’s Networking and Information Technology Research and Development Act (H.R. 967) and The Cybersecurity Enhancement Act (H.R. 756).
Security Agencies Endorse National Data Breach Notification Standards
On Wednesday, March 5, 2014, the House Financial Services Subcommittee on Financial Institutions and Consumer Credit held a hearing entitled: “Data Security: Examining Efforts to Protect Americans’ Financial Information.” While the hearing was the first in the House Financial Services Committee on the issue of data security, it was the sixth Congressional hearing on the topic in recent weeks. The House Financial Services Committee has jurisdiction over laws governing the handling of sensitive personal financial information about consumers. The hearing examined why and how breaches occur, activity during and after a breach, security to prevent breaches, and payment system technologies to help prevent future breaches.
Witnesses from the U.S. Department of Homeland Security and the U.S. Secret Service offered support for Congressional action on a national breach notification standard. The agencies agreed a national standard would benefit consumers and replace piecemealed notification procedures currently in place. Both agencies indicated their support for Attorney General Eric Holder’s request to Congress for passage of a national standard.
House Passes Flood Insurance Legislation
On Tuesday, March 4, 2014, members of the House acted to pass a bipartisan bill capping rate increases in the National Flood Insurance Program (NFIP). The House passed the flood insurance bill by an overwhelming vote of 306-91. The original language offered included a threshold too high to repay the NFIP program fund, which is currently $24 billion in debt. The new affordability language and bipartisan passage of the legislation is encouraging for both Senators Mary Landrieu (D-LA) and Robert Menendez (D-NJ), who have lead the charge for swift passage of the House bill in the Senate. While their bill has room for improvement, the revisions to affordability and escrow issues are significant changes from the original Biggert-Waters legislation of 2012.
CBA will stay engaged and update members as the legislation moves from the Senate to the President’s desk for his signature.
CBA Submits Comment on TCPA Petition
On Tuesday, March 4 , 2014, CBA , with other associations, sent a letter to the Federal Communications Commission (FCC) regarding the Communication Innovators’ (CI) Telephone Consumer Protection Act (TCPA) petition. The letter reiterates CBA’s support for the CI petition, and urges the FCC to issue a narrow declaratory ruling acknowledging: 1) the variety of predictive dialing solutions available today and; (2) to be considered an autodialer, any solution must have the statutorily required “capacity to store or produce numbers to be called, using a random or sequential number generator, and to dial such numbers.”
CBA will continue its engagement in this issue in collaboration with trade partners and will keep members informed.
Unanimous Senate Committee Vote on SBA Administrator
On Tuesday, March 4, 2014, Maria Contreras-Sweet’s nomination to Administrator of the Small Business Administration (SBA) received unanimous support by the Senate Small Business Committee. Her nomination now moves to the full Senate for a confirmation vote.
Small Business Committee Chairwoman Maria Cantwell (D-WA) hailed Contreras-Sweet’s public and private sector experience, saying “She knows the SBA products and she knows how to reach communities that traditionally have trouble accessing capital.” Ranking member Jim Risch (R-ID) echoed Cantwell’s statement, adding, “There is no daylight between us.”
Contreras-Sweet was nominated on January 15, 2014 to replace Karen Mills, who resigned from the position in August of 2013 after more than four years at the SBA.
