The CFPB’s allegation that Meridian was a “covered person” does not appear to be well-founded. The CFPB’s consent order expressly alleged that Meridian was a “covered person” as that term is defined by U.S.C. § 5481(6). But the sole law at issue in Meridian was RESPA, and “covered person” is not a RESPA concept.

clusionReal-estate agents who participate in joint ventures subject themselves to the authority of the Consumer Financial Protection Bureau, state attorneys general, and other state regulators, all of which may enforce the CFPA’s prohibition on abusive conduct. And given the Bureau’s aggressive interpretation of this statute, real-estate agents participating in joint ventures might reconsider their involvement, particularly in states like Arizona and New York and in the District of Columbia, where existing laws already forbid joint-venture title companies from compensating real-estate agents. CFPB, Policy Statement on Abusive Acts or Practices, (April 3, 2023), https://www.consumerfinance.gov/compliance/supervisory-guidance/policy-statement-on-abusiveness/. Statement of Policy Regarding Prohibition on Abusive Acts or Practices, 88 Fed. Reg. 21,883 (Apr. 12, 2023), https://www.regulations.gov/document/CFPB-2023-0018-0001/comment.See 12 U.S.C. § 5536(a)(1)(B).See 12 U.S.C. § 5517(b).See 12 U.S.C. § 5481(6), (15)(A)(i) & (iii).See 12 U.S.C. § 5481(25)(C)(ii).See 12 U.S.C. § 5481(25)(B).CFPB v. D & D Mktg., CV 15–9692 PSG (Ex), 2016 WL 8849698 (C.D. Cal. Nov. 17, 2016) (holding that a company that provided leads to lenders could be a “service provider”).See 12 U.S.C. § 5481(26).See 12 U.S.C. § 5552(a)(1) (authorizing state attorneys general and regulators to enforce the CFPA).See 12 U.S.C. § 5531(d)(2)(C). 88 Fed. Reg. at 21,889.Id.Id.Id. at 21,889–90.See, e.g., Straight v. Approved Fed. Sav. Bank, No. 05-5187, 2005 WL 1288091, at *2 (W.D. Wash. May 27, 2005) (“An escrow agent serves [as] a neutral depository for the monies and documents involved in a real estate deal.”); In re Davis, 172 B.R. 437, 452 (Bankr. D.C. 1994) (holding that “the settlement agent . . . had a fiduciary responsibility to each of the parties to the transaction”); Red Lobster Inns v. Lawyers Title Ins. Corp., 492 F. Supp. 933, 941 (E.D. Ark. 1980) (“Where a person acts as escrow agent for parties to a land sale, he

A "covered person" is someone who offers or provides financial products or services for use by consumers primarily for personal, family, or household purposes. 12 U.S.C § 5481(6). A service provider is "any person that provides a material service to a covered person in connection with the offering or provision by such covered person of a consumer financial product or service."

[10] “Buy Here Pay Here” companies are similar to captives in that they typically are associated with specific “Buy Here Pay Here” automobile dealers, which traditionally have served the subprime market.[11] 12 U.S.C. § 5481(15)(A)(ii). Note that the CFPB already has supervisory authority over existing covered persons that offer the leases described in Section 5481.

efendants relating to pending borrower requests fo relief.25* * *Without appellate, legislative or divine intervention, the Third Circuit’s decision will stand, and as of now, the litigation will continue in the District Court.Footnotes1. Consumer Financial Protection Bureau v. Nat’l Collegiate Master Student Loan Tr., No. 22-1864 (3d Cir. 2024) *26 (hereinafter “Third Circuit Decision”).2. Id. at 9 (quoting In Re NCLST, 251 A.3d at 131).3. Id. at 10.4. CFPB v. Nat’l Collegiate Master Student Loan Trust, 575 F. Supp. 3d 505, 509–10 (D. Del. 2021).5. CFPB v. Nat’l Collegiate Master Student Loan Tr., No. CV 17-1323 (MN), 2021 WL 1169029, at *2 (D. Del. Mar. 26, 2021).6. Third Circuit Decision at 1.7. 12 U.S.C. § 5491(c).8. Under the Constitution, subject to certain exceptions, the President can remove the head of any agency without cause. However, the authorizing statute of the CFPB provides that the CFPB director can only be removed “for cause.” Id. at 11.9. Id. at 36.10. Id. at 14.11. 12 U.S.C. § 5481(6)(A).12. Id. (emphasis added).13. Third Circuit Decision at 29.14. CFPB v. Nat’l Collegiate Master Student Loan Trust, 575 F. Supp. 3d 505, 509–10 (D. Del. 2021), (citing Barbato v. Greystone All., LLC, 916 F.3d 260, 266–68 (3d Cir. 2019) (finding that a “passive debt owner” counted as a “debt collector” under the Fair Debt Collection Practices Act when it contracted with a third party to collect debt on its behalf)).15. Third Circuit Decision at 27 (quoting Saxon v. Sw. Airlines Co., 993 F.3d 492, 495 (7th Cir. 2022)) (internal quotations removed) (discussing enforcement of an arbitration clause under the Federal Arbitration Act which applied to a “class of workers engaged in foreign or interstate commerce”) (emphasis added).16. Id. at 28.17. Id. at 32.18. 12 U.S.C. § 5536(a)(1)(B).19. 12 U.S.C. § 5536(a)(2).20. 12 U.S.C. § 5481(26).21. 12 U.S.C. § 5536(a).22. 12 U.S.C. § 5514(e).23. CFPB Bulletin 2012-03, Service Providers, April 12, 2012, available at https://files.consumerfinance.gov/f

aths forward. Unless businesses are equipped with the tools to counter Bureau efforts in enforcement inquiries, there is a risk that companies will miss opportunities available to it under the CFPA to resolve matters and avoid significant business disruptions. We regularly execute on solutions for such issues on behalf of clients. Please feel free to contact us if you wish to discuss the merchant exemption or the retailers’ exception to covered persons.What about the unconstitutionality of the Bureau’s funding structure? Can’t the Fifth Circuit ruling provide an avenue to stay all Bureau efforts to oversee retailers and tech companies? There are interesting appellate arguments and strategies, none of which are likely to provide immediate and conclusive relief for businesses currently being investigated.12 U.S.C. section 5511(c)(4); 12 U.S.C. section 5531(a). The Bureau can also certainly act against “service providers” of covered persons, but that is not within the scope of this piece.12 U.S.C. section 5481(6).12 U.S.C. section 5481(15)(A)(vii) (emphasis added).CFPB Takes Action to Obtain $120 Million in Redress from Sprint and Verizon for Illegal Mobile Cramming (May 12, 2015); CFPB and Arkansas Attorney General Settle with Home-Alarm Company for Using Consumers’ Credit Scores Without Proper Notice (Dec. 11, 2020); CFPB Settles Claims with Sterling Jewelers, Inc. (Jan. 16, 2019); CFPB Action Against Nexus Services, Inc., Libre by Nexus, Inc., Micheal Donovan, Richard Moore, and Evan Ajin (Feb. 22, 2021).12 U.S.C. section 5517(a)(1) (emphasis added).In-depth 2022-374

However, the CFPB’s supervisory authority over these institutions is not unlimited. In general, the CFPB may engage in supervision only for three purposes: (1) assessing compliance with the requirements of “Federal consumer financial laws” (a term defined in 12 U.S.C. 5481(14) to include specific enumerated consumer laws); (2) obtaining information about the activities subject to such laws and the associated compliance systems or procedures of financial institutions; and (3) detecting and assessing associated risks to consumers and to markets for consumer financial products and services. See 12 U.S.C. 5515(b).

See Part I of this series of articles, at note 4.[18] SEC, Introduction to Investing: Glossary, https://www.investor.gov/introduction-investing/investing-basics/glossary/financial-product. In the federal banking laws governing the Consumer Financial Protection Bureau, a “financial product or service” is defined under 12 U.S.C. § 5481(15) and a “consumer financial product or service” is defined in 12 U.S.C. § 5481(5).[19] David Kestenbaum, Planet Money: What Is Seigniorage?, NPR (Jan. 9, 2009), https://www.npr.org/sections/money/2009/01/what_is_seigniorage_1.html (“In the old days, seigniorage was the revenue the government earned because it costs less than a dollar to print a dollar.

Cal. Fin. Code § 90005(f). Cal. Fin. Code §90005(n); 12 U.S.C. §5481(26)(A). Cal. Fin. Code §90005(k); 12 U.S.C. §5481(15)(A), (B)(i).

The practical takeaways of the case are more clear than the legal takeaways: the CFPB will seek to hold secondary actors responsible for their role in allegedly illegal conduct and entities should take steps to protect themselves from liability. Those steps should include robust compliance systems designed to detect and act upon counter-party risk, as well as a culture of compliance that recognizes the new legal regime that seeks to hold companies to a heightened standard of care.Notes:[1] 12 U.S.C. § 5481(26)(A).[2] 12 U.S.C. § 5481(26)(B)(i).