CFPB issues guidance on “favorable” activities to be considered in enforcement

cfpbThe CFPB issued guidance on Tuesday to entities covered under the watchdog agency’s supervisory and enforcement authority, describing activities that could be considered “favorably” by the agency in making its enforcement decision.

In exercising its enforcement discretion, the CFPB considers the nature and extend of the identified violations, the actual or potential harm the violations have caused or may cause, whether the firm has a history of violations and a firm’s effectiveness in addressing any violations.

“The purpose of this guidance is to encourage activity that has concrete and substantial benefits for consumers and contributes significantly to the success of the Bureau’s mission,” the CFPB said in the guidance. “Depending on its form and substance, responsible conduct can improve the bureau’s ability to promptly detect violations of the federal consumer protection laws, increase the effectiveness and efficiency of enforcement investigations, enable the bureau to pursue a larger number of worthy investigations with its finite resources, provide important evidence in enforcement investigations and cases, and help more consumers in more matters promptly receive financial redress and additional meaningful remedies for any harm they experienced.”

When determining whether a form of credit warrants an enforcement investigation, the CFPB considers four categories of conduct, including self-policing, self-reporting, remediation and cooperation, during the investigation.

“The bureau intends and expects that this guidance will encourage parties subject to the bureau’s enforcement authority to engage in more self-policing,” the CFPB said. “When potential violations of the consumer financial laws arise, the bureau intends and expects that parties will engage in more self-reporting to the bureau, more prompt and complete remediation of harm to victimized consumers, and more cooperation with the Bureau in its enforcement investigations. Such an outcome, the bureau believes, would benefit both consumers and providers of consumer financial products and services.”

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