- CFPB Orders Citi to Pay $25.9 Million for Intentional, Illegal Discrimination Against Armenian Americans Consumer Financial Protection Bureau
- Citi (C) to Pay $25.9 Million for Armenian-American Discrimination Bloomberg
- Citigroup discriminated against Armenian-Americans, federal regulator says; bank fined $25.9 million Yahoo Finance
- Citigroup Fined for Discriminating Against Armenian Americans The Wall Street Journal
- Citibank fined $26 million for ‘treating Armenian Americans like criminals,’ US agency says CNN
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Tag Archives: CFPB
Money stored in payment apps like Venmo may be more vulnerable than bank deposits, CFPB says – CNBC
- Money stored in payment apps like Venmo may be more vulnerable than bank deposits, CFPB says CNBC
- Money stored in Venmo, other payment apps could be vulnerable, financial watchdog warns The Associated Press
- Money stored in Venmo, other payment apps could be vulnerable Honolulu Star-Advertiser
- CFPB Finds that Billions of Dollars Stored on Popular Payment Apps May Lack Federal Insurance Consumer Financial Protection Bureau
- Americans are holding ‘billions of dollars’ in uninsured accounts, federal agency warns. Here’s what you can do about it. MarketWatch
2,600 student-loan borrowers to get $11 million in debt relief: CFPB – Business Insider
- 2,600 student-loan borrowers to get $11 million in debt relief: CFPB Business Insider
- CFPB Orders Repeat Offender Portfolio Recovery Associates to Pay More Than $24 Million for Continued Illegal Debt Collection Practices and Consumer Reporting Violations Consumer Financial Protection Bureau
- CFPB orders Portfolio Recovery Associates to pay $24 million American Banker
- Portfolio Recovery Associates Under Fire for Misconduct Bankrate.com
- U.S. watchdog orders Virginia debt collector to pay $24 million for illegal practices Yahoo Canada Finance
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CFPB Orders Repeat Offender Portfolio Recovery Associates to Pay More Than $24 Million for Continued Illegal Debt Collection Practices and Consumer Reporting Violations – Consumer Financial Protection Bureau
- CFPB Orders Repeat Offender Portfolio Recovery Associates to Pay More Than $24 Million for Continued Illegal Debt Collection Practices and Consumer Reporting Violations Consumer Financial Protection Bureau
- 2,600 student-loan borrowers to get $11 million in debt relief: CFPB Business Insider
- CFPB orders Portfolio Recovery Associates to pay $24 million American Banker
- Portfolio Recovery Associates Under Fire for Misconduct Bankrate.com
- U.S. watchdog orders Virginia debt collector to pay $24 mln for illegal practices Reuters
- View Full Coverage on Google News
Wells Fargo to Pay Record CFPB Fine to Settle Allegations It Harmed Customers
Wells Fargo
WFC -1.04%
& Co. reached a $3.7 billion deal with regulators to resolve allegations that it harmed more than 16 million people with deposit accounts, auto loans and mortgages.
The settlement with the Consumer Financial Protection Bureau includes a $1.7 billion penalty, the agency’s largest-ever fine, and more than $2 billion in consumer restitution, the regulatory agency said Tuesday.
The consumer watchdog agency said the bank illegally assessed fees and interest charges on loans for cars and homes. Some consumers had their vehicles illegally repossessed while others had overdraft fees unlawfully applied, the agency said.
Wells Fargo’s regulatory troubles continue to ripple through the bank more than six years after its fake account scandal burst into public view. Other problems later surfaced across the San Francisco-based bank, including in its lending and deposit-taking businesses.
The CFPB settlement resolves a major penalty hanging over Wells Fargo but leaves it handcuffed by other regulators. The Federal Reserve has had a cap on the bank’s asset growth in place for nearly five years. Politicians continue to target the bank, and investors have filed a series of class-action lawsuits.
“Wells Fargo is a corporate recidivist,” said CFPB Director
Rohit Chopra,
on a call with reporters Tuesday. He said the settlement “should not be read as a sign that Wells Fargo has moved past its longstanding problems.”
The bank had been negotiating with the CFPB for months in an effort to lump as many outstanding issues into the settlement as possible, according to people familiar with the matter.
Much of the $2 billion remediation included in the settlement has already been doled out to customers. The bank, for example, has paid $1.3 billion to 11 million customers who had auto-loan servicing issues, the CFPB said.
Wells Fargo has been working for years to resolve a series of regulatory matters stemming from a fake-accounts scandal in 2016. Afterward, other problems surfaced across the bank, including in its mortgage and auto-lending businesses.
The CFPB said the bank’s actions span over a decade. Wells Fargo incorrectly applied auto-loan payments because of technology and compliance failures from 2011 through 2022, the agency said. Errors in its home loan modification process went on from 2011 to 2018, the agency said.
The bank sometimes charged overdraft fees even when a customer had enough funds available to make a debit-card transaction or ATM withdrawal, CFPB said. Wells Fargo is required to refund customers about $205 million in fees since the beginning of last year that weren’t yet reversed. CFPB will oversee that process.
Mr. Chopra, an appointee of President Biden, has said he plans to target repeat offenders. “Corporate recidivism has become normalized and calculated as the cost of doing business,” he said in a speech earlier this year. He has also sought to make his agency more adversarial toward financial firms.
The CFPB said Wells Fargo has accelerated efforts to clean up its act since 2020. Tied to the settlement, the agency will terminate one of the consent orders it had placed on the bank in 2016 and clarify that a 2018 consent order will terminate in no more than three years.
Wells Fargo, led by CEO Charlie Scharf, had signaled for months that it expected another large regulatory penalty.
Photo:
Drew Angerer/Getty Images
“This far-reaching agreement is an important milestone in our work to transform the operating practices at Wells Fargo and to put these issues behind us,” Chief Executive
Charlie Scharf
said in a statement.
Mr. Scharf was brought in to clean up the bank in 2019. He has overhauled the top executive ranks, cut its workforce and gave priority to remaking the bank’s back-end systems for managing internal controls and risk.
The bank had signaled for months that it expected another big regulatory penalty, and it took a $2 billion charge in the third quarter tied to resolving long-running legal and regulatory issues. The bank said Tuesday that it expects an operating losses expense of $3.5 billion in the current quarter.
Shares of the bank fell about 1.5%.
Write to Ben Eisen at ben.eisen@wsj.com
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Wells Fargo agrees to $3.7 billion settlement with CFPB over consumer abuses
Charles Scharf, chief executive officer of Wells Fargo & Co., listens during a House Financial Services Committee hearing in Washington, D.C., U.S., on Tuesday, March 10, 2020.
Andrew Harrer | Bloomberg | Getty Images
Wells Fargo agreed to a $3.7 billion settlement with the Consumer Financial Protection Bureau over customer abuses tied to bank accounts, mortgages and auto loans, the regulator said Tuesday.
The bank was ordered to pay a $1.7 billion civil penalty and “more than $2 billion in redress to consumers,” the CFPB said in a statement. In a separate statement, the San Francisco-based company said that many of the “required actions” tied to the settlement were already done.
“The bank’s illegal conduct led to billions of dollars in financial harm to its customers and, for thousands of customers, the loss of their vehicles and homes,” the agency said in its release. “Consumers were illegally assessed fees and interest charges on auto and mortgage loans, had their cars wrongly repossessed, and had payments to auto and mortgage loans misapplied by the bank.”
The resolution lifts one overhang for the bank, which has been led by CEO Charlie Scharf since October 2019. In October, the bank set aside $2 billion for legal, regulatory and customer remediation matters, igniting speculation that a settlement was nearing. But other regulatory hurdles remain: Wells Fargo is still operating under consent orders tied to its 2016 fake accounts scandal, including one from the Fed that caps its asset growth.
CFPB Director Rohit Chopra said Wells Fargo’s “rinse-repeat cycle of violating the law” hurt millions of American families and that the settlement was an “important initial step for accountability” for the bank.
Shares of the bank fell 2.5% in premarket trading.
This story is developing. Please check back for updates.
Appeals court rules CFPB funding source unconstitutional
The Fifth Circuit U.S. Court of Appeals found this week that the funding source for the Consumer Financial Protection Bureau (CFPB) is unconstitutional, according to a decision reached by a three-judge panel.
The panel found that the “design of the CFPB violated the Constitution because it receives funding through the Federal Reserve, rather than appropriations legislation passed by Congress,” reads a story on the decision by Politico. “Democrats established the structure when they created the CFPB in the 2010 Dodd-Frank law as a way to shield the bureau from political pressures that could impact its oversight of the finance industry.”
The panel also vacated a small-dollar lending rule that was enacted in 2017, which had been targeted by payday lending advocates.
The plaintiffs, the Community Financial Services Association of America and Consumer Service Alliance of Texas, argued the CFPB’s payday rule was made arbitrarily and capriciously, and exceeded its statutory authority.
The plaintiffs also challenged the CFPB’s structure, its powers granted by Congress, the director’s protections from removal, claiming they were all unconstitutional.
“Congress’s decision to abdicate its appropriations power under the Constitution, i.e., to cede its power of the purse to the Bureau, violates the Constitution’s structural separation of powers,” the judges wrote.
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The CFPB itself has thus far declined to say whether it will attempt to appeal the decision. However, a CFPB spokesperson told Politico that the ongoing work of the agency will remain unaffected for the foreseeable future.
“[T]here is nothing novel or unusual about Congress’s decision to fund the CFPB outside of annual spending bills,” said CFPB spokesperson Sam Gilford. “Other federal financial regulators and the entire Federal Reserve System are funded that way, and programs such as Medicare and Social Security are funded outside of the annual appropriations process. The CFPB will continue to carry out its vital work enforcing the laws of the nation and protecting American consumers.”
In mid-2020, the United States Supreme Court heard another challenge to the constitutionality of the CFPB and found that while its single-director structure insulating an installed director from firing by the president was unconstitutional, the agency itself would remain intact. This helped lead President Biden to seek the appointment of his own CFPB director upon entering office, and a similar decision swiftly followed from the Supreme Court related to the Federal Housing Finance Agency.
The CFPB currently maintains regulatory enforcement authority over independent mortgage banks, depositories, fintechs and the reverse mortgage industry at the national level.
James Kleimann contributed reporting.
Federal Appeals Court Finds CFPB’s Funding Method Unconstitutional
The Consumer Financial Protection Bureau headquarters in Washington, D.C.
Photo:
Andrew Kelly/REUTERS
WASHINGTON—A federal appeals court found the U.S. Consumer Financial Protection Bureau is funded through an unconstitutional method, a ruling that threw out the agency’s regulation on payday lenders and struck a blow against how the agency operates.
The ruling, by a three-judge panel of the Fifth U.S. Circuit Court of Appeals in New Orleans, found the CFPB’s funding structure violated the Constitution’s doctrine of separation of powers, which sets the authority of the three branches of government. Congress has the sole power of the federal purse, and the bureau’s funding structure undercuts that authority, the court said.
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CFPB opens probe into red hot ‘buy now, pay later’ industry
The Consumer Financial Protection Bureau said Thursday that it is looking to “collect information on the risks and benefits of these fast-growing loans” from five leading BNPL companies: Affirm; Australia’s Afterpay, which is getting bought by Square owner Block; PayPal; privately held Swedish fintech Klarna; and Zip, another BNPL firm headquartered in Australia.
“Buy now, pay later is the new version of the old layaway plan, but with modern, faster twists where the consumer gets the product immediately but gets the debt immediately too,” said CFPB Director Rohit Chopra in a statement Thursday.
The CFPB said it was specifically worried about how quickly consumers can accumulate debt using BNPL services and also about how the BNPL companies may harvest data about their customers. It added that it is working with international partners in Australia, Sweden, Germany and the United Kingdom on the inquiry.
The announcement comes one day after six Democratic US senators on the Committee on Banking, Housing, and Urban Affairs, including Elizabeth Warren, wrote a letter to the CFPB, urging it to look into potentially abusive practices in the industry.
“While the emergence of BNPL as affordable small-dollar credit has potentially provided an alternative to more costly forms of credit, these products also have the potential to cause consumer harm,” the senators wrote.
“Nonbank BNPL providers currently operate without meaningful oversight. They are not generally subject to federal supervision that can spot unfair, deceptive, or abusive practices or other violations of federal consumer protection laws,” the senators added, noting that “consumers may be unaware of these regulatory gaps and may be erroneously led to believe that credit obtained from a BNPL provider comes with protections that are similar to those for credit cards.”
BNPL has been a big trend in the financial services world this year. Affirm shares have nearly doubled from their initial public offering price, even after factoring in Thursday’s drop. The company announced a deal with Amazon (AMZN) in August.
And Klarna is one of the world’s most valuable privately held startups. With a recent valuation of $45.7 billion, Klarna is one of the more eagerly awaited potential IPOs of 2022.
A spokesperson for Affirm said in an email to CNN Business that “we welcome the CFPB’s review and support regulatory efforts that benefit consumers and promote transparency within our industry”.
The Affirm spokesperson added that the company has “never charged a late or hidden fee, ever” and that “we will continue to engage with all of our stakeholders, including regulators, to support efforts that advance our mission.”
A spokesperson for Klarna told CNN Business that “we believe proportionate regulation is a good thing and set the standard by providing consumers with an interest free, fair and sustainable alternative to credit cards.”
“Through this process, we believe those benefits will be made abundantly clear and will continue our work with regulators to inform them about how our products are structured, used, and benefit both consumers and retailers,” the Klarna spokesperson added.
An Afterpay spokesperson said to CNN Business that the company “welcomes efforts to ensure that there are appropriate regulatory protections for consumers in the diverse BNPL industry, and that providers are meeting high standards and delivering positive consumer outcomes while protecting their data,” adding that “Afterpay provides consumers with better transparency, lower costs, and better budgeting tools than traditional forms of credit and promotes responsible spending.”
For its part, a PayPal spokesperson told CNN Business that “our customers trust us to be transparent and we take this responsibility very seriously. PayPal is reviewing the letter and we will continue to work productively with the CFPB to provide information as requested.”
Zip said in a statement Thursday night that “has always believed in transparency and we welcome the opportunity to continue sharing insights with the CFPB’s research and markets division. We have a shared mission to prioritize consumer financial wellbeing and as such we applaud the CFPB’s dedication to consumer protection.”
It went on to say that the company “already abides by a number of federal and state regulations and we will continue to prioritize regulatory compliance as we create consumer-friendly products and services.”
Block was not immediately available for comment.