In modern times, the CFPB has delivered various communications regarding its approach to regulating tribal lending. The CFPB pursued an aggressive enforcement agenda that included tribal lending under the bureau’s first director, Richard Cordray. After Acting Director Mulvaney took over, the CFPB’s 2018 five-year plan suggested that the CFPB had no intention of “pushing the envelope” by “trampling upon the liberties of our residents, or interfering with sovereignty or autonomy for the states or Indian tribes.” Now, a decision that is recent Director Kraninger signals a return to an even more aggressive position towards tribal financing linked to enforcing federal customer monetary guidelines.
On February 18, 2020, Director Kraninger issued an purchase denying the request of lending entities owned by the Habematolel Pomo of Upper Lake Indian Tribe to set apart particular CFPB investigative that is civil (CIDs). The CIDs under consideration had been given in October 2019 to Golden Valley Lending, Inc., Majestic Lake Financial, Inc., hill Summit Financial, Inc., Silver Cloud Financial, Inc., and Upper Lake Processing Services, Inc. (the “petitioners”), looking for information associated with the petitioners’ so-called violation regarding the Consumer Financial Protection Act (CFPA) “by collecting quantities that consumers would not owe or by simply making false or deceptive representations to customers in the course of servicing loans and collecting debts.” The petitioners challenged the CIDs on five grounds – including sovereign immunity – which Director Kraninger rejected.
Ahead of issuing the CIDs, the CFPB filed suit against all petitioners, with the exception of Upper Lake Processing Services, Inc., within the U.S. District Court for Kansas. The CFPB alleged that the petitioners engaged in unfair, deceptive, and abusive acts prohibited by the CFPB like the CIDs. Also, the CFPB alleged violations associated with Truth in Lending Act by perhaps maybe not disclosing the annual percentage rate on the loans. In 2018, the CFPB voluntarily dismissed the action against the petitioners without prejudice january. Consequently, it’s astonishing to see this 2nd move by the CFPB of the CID from the petitioners.
Director Kraninger addressed each one of the five arguments raised by the petitioners into the choice rejecting the demand to create aside the CIDs:
The CFPB’s issuance and defense regarding the CIDs generally seems to signal a change during the CFPB straight back towards an even more aggressive enforcement method of lending that is tribal. Certainly, whilst the pandemic crisis persists, CFPB’s enforcement activity generally speaking hasn’t shown signs and symptoms of slowing. This really is true even as the Seila Law constitutional challenge to the CFPB is pending. Tribal lending entities must certanly be tuning up their conformity administration programs for conformity with federal customer financing rules, including audits, to make sure they have been prepared for federal review that is regulatory.