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Defense of consumer financial protection whistleblower laws

In its redesign whistleblower web page, the CFPB is seeking the help of whistleblowers to provide advice on the following issues:

  • Any discrimination related to financial products or services intended for consumers or small businesses

  • Any use of artificial intelligence / machine learning models based on faulty or incomplete data sets, which use proxies for race, gender or other group characteristics, or which impact groups or particular classes of people more than others;

  • False or deceptive advertising of financial products or services to consumers, including mortgages

  • Failure to collect, maintain and report accurate data on mortgage applications and originations

  • Failure to provide or use accurate information on consumer reports

  • Failure to review mortgage borrower loss mitigation requests in a timely manner

  • Any unjust, deceptive or abusive act or practice with respect to any consumer financial product or service.

The CFPB also announced that it is seeking guidance to help it tackle the role of artificial intelligence by enabling intentional and unintentional discrimination in decision-making systems. For example, arrecent study of algorithmic mortgage underwriting found that black and Hispanic families were more likely to be denied a mortgage than similarly white families.

Proposed CFPB Whistleblower Reward Program

At present, there is no whistleblower rewards program at CFPB and penalties collected as part of CFPB enforcement actions are not eligible for whistleblower rewards for actions related to the CFPB. DRY. In light of the success of the SEC’s whistleblower program as an effective tool tool to protect investors and strengthen capital markets, the CFPB called on Congress to establish a rewards program to strengthen the CFPB’s enforcement of consumer financial protection laws.

In September 2021, Senator Catherine Cortez Masto presented the Financial Compensation Office Consumer Financial Protection Whistleblower Act (S. 2775), which would establish a CFPB whistleblower rewards program similar to the SEC whistleblower program. It would allow the CFPB to reward whistleblowers between 10% and 30% of the monetary penalties levied in the context of successful enforcement action when the penalty exceeds $ 1 million. And in cases involving monetary penalties of less than $ 1 million, the CFPB would be able to award any whistleblower 10% of the amount collected or $ 50,000, whichever is greater.

The CFPB Whistleblower Financial Compensation Act is co-sponsored by the Chairman of the Senate Committee on Banking, Housing and Urban Affairs, Senator Sherrod Brown and Senators Dick Durbin, Elizabeth Warren, Jeff Merkley, Richard Blumenthal and Tina Smith . In the House, Representative Al Green introduced a companion bill (HR 5484).

A whistleblower reward program at CFPB could significantly increase the enforcement of consumer financial protection laws, including laws prohibiting unfair, deceptive or abusive acts and practices. The CFPB has authority over a wide range of consumer financial products and services, including mortgages, deposits, credit cards, loan servicing, check guarantees, consumer reporting data collection, debt collection associated with consumer financial products and services, real estate settlement, money transmission and financial data processing. Additionally, the CFPB is the leading consumer compliance monitoring, enforcement and regulatory authority on deposit-taking institutions with over $ 10 billion in assets.

Hopefully Congress will act quickly to enact the CFPB Whistleblower Financial Compensation Act.

Protection of CFPB whistleblowers

While Congress did not establish a whistleblower reward program when it created the CFPB, it included a strong whistleblower protection provision in the Consumer Financial Protection Act of 2010 (CFPA). The anti-retaliation provision of the Consumer Financial Protection Act provides a cause of action for whistleblowers from businesses who face retaliation for raising concerns about potential violations of CFPC rules or regulations.

Workers protected by the CFPA anti-reprisal law

The term “covered employee” means “any individual performing tasks related to the offering or provision of a financial product or service to consumers”. the APFC defines a “consumer financial product or service” to include “a wide variety of financial products or services offered or provided for the use of consumers primarily for personal, family or household purposes, and certain financial products or services that are delivered , offered or provided as part of a consumer financial product or service. . . Examples of these include. .. originating, lending, brokerage and servicing of residential mortgages, and related products and services such as mortgage modification and foreclosure relief; student loans; payday loans; and other financial services such as debt collection, credit reports, credit cards and related activities, money transmission, check cashing and related activities, prepaid cards and credit card services. debt relief.

Scope of Protected Whistleblowing Regarding Breaches of Consumer Financial Protection

The CFPA protects disclosures made to an employer, CFPB or any state, local or federal authority, government or law enforcement agency regarding any act or omission that the employee reasonably believes to be a violation of any policy. of the CFPB or any other financial regulation of the consumer. the protection law applied by the Office. This includes several federal laws regulating “unfair, deceptive or abusive practices.” . . related to the provision of financial products or services to consumers.

Some of the issues that the CFPB regulates include:

  • bribes paid to mortgage issuers or insurers;

  • misleading advertising;

  • discriminatory lending practices, including a violation of the Equal Credit Opportunity Act (“ECOA”);

  • excessive fees;

  • any false, misleading or deceptive representation or means in connection with the collection of any debt; and

  • debt collection activities that violate the Fair Debt Collection Practices Act (FDCPA).

Some the consumer financial protection laws that the CFPB applies include:

  • Real Estate Settlement Procedures Act;

  • Home Mortgage Disclosure Act;

  • Equal Credit Opportunity Act;

  • The Truth in the Loan Law;

  • Savings Truth Act;

  • Fair Credit Billing Act;

  • Fair Credit Reports Act;

  • Electronic Funds Transfer Act;

  • Consumer Leasing Act;

  • Fair Debt Collection Practices Act;

  • Homeowners Protection Act; and

  • Safe and Fair Application of the Mortgage Licensing Act

Standard of reasonable belief in reprisal cases of bank whistleblowers

The CFPA’s Whistleblower Protection Act uses a standard of reasonable belief. As long as the complainant’s belief is reasonable, the whistleblower is protected, even if he makes an error of law or of fact about the underlying breach of a law. law or regulation falling within the competence of the CFPB.

Forbidden Reprisals

The CFPA’s anti-retaliation law prohibits a wide range of actions unfavorable to employment, including dismissal, “intimidation, threat, restriction, coercion, blacklisting, or discipline, of any Covered Employee or any authorized representative of Covered Employees ”as a result of the employee’s Protected Whistleblower.

Proving retaliation from FPAC whistleblowers

To prevail in a reprisal claim by an FPAC whistleblower, the whistleblower need only prove that his or her protected conduct was a contributing factor to the adverse employment action, that is to say, that the protected activity, alone or in combination with other factors, in one way or another influenced the outcome of the employer’s decision.

When the employer takes the unfavorable employment action “shortly after” learning about the protected activity, the courts can infer a causal link between the two. Van Asdale v. Int’l Game Tech., 577 F.3d 989, 1001 (9th Cir. 2009).

Filing of a reprisal claim for the CFPA’s financial whistleblower

CFPA complaints are filed with OSHA, and the statute of limitations is 180 days from the date the alleged violation occurs, which is the date the retaliation decision was made and communicated to the whistleblower. .

The complaint does not need to be in any particular form and can be orally filed with OSHA. A CFPA complaint does not need to meet the strict advocacy requirements that apply in federal court, and instead, the administrative complaint “simply alerts OSHA to the existence of the alleged retaliation and the Complainant’s desire for OSHA to investigate the complaint ”. If the complaint alleges every element of an allegation of reprisal by an CFPA whistleblower and the employer does not demonstrate in a clear and convincing manner that they would have taken the same action in the absence of the alleged protected activity , OSHA will investigate.

OSHA investigates FPAC complaints to determine whether there are reasonable grounds to believe that a protected activity contributed to the alleged wrongdoing. If OSHA finds a violation, it can order the whistleblower’s reinstatement and other remedies.