The CFPB’s petition filed in a Pennsylvania federal district court last June to enforce a CID issued to J.G. Wentworth, LLC, a purchaser of structured settlements and annuities, was denied by the court last week as moot.  The order denying the petition was entered after the CFPB filed a Notice in which it indicated that it had withdrawn the petition on June 1, stated that “because the CID is no longer active, the Bureau intends to soon dismiss the Petition,” and asked the court to refrain from ruling on the petition.  The Notice was followed by a “Suggestion of Mootness” filed by the CFPB in which it stated that because it had withdrawn the CID, the action was moot and must be dismissed by the court for lack of subject matter jurisdiction.  No reason was given by the CFPB for its decision to withdraw the CID.

The CFPB had issued the CID to J.G. Wentworth in September 2015 to investigate alleged violations of consumer protection laws.  J.G. Wentworth filed an administrative petition to set aside the CID as beyond the CFPB’s statutory authority, arguing that its purchase of settlements and annuities was not a consumer financial product or extension of credit subject to the CFPB’s UDAAP authority or TILA.  The CFPB denied the petition to set aside, asserting that J.G. Wentworth might be providing financial advisory services to consumers in connection with offers to purchase structured settlements or annuities, which would constitute a “consumer financial product or service” subject to Dodd Frank’s UDAAP prohibition.  Alternatively, the CFPB asserted that the purchases could be extensions of credit subject to TILA.  After its petition was denied, J.G. Wentworth produced some initial information to the CFPB, but ultimately refused to comply with the CID on the grounds the CFPB lacked jurisdiction over its activities.  In response, the CFPB filed the petition to enforce the CID.

The Chamber of Commerce of the United States of America filed an amicus brief opposing the CFPB’s petition in which the Chamber argued that the petition represented an attempt by the CFPB to expand its jurisdiction beyond the limits of Dodd-Frank.  The CFPB has consistently pushed the jurisdictional envelope by adopting broad interpretations of its statutory authority with the most aggressive and public example of the CFPB’s “jurisdictional creep” being its efforts to indirectly regulate the conduct of car dealerships (which is expressly carved out from the CFPB’s jurisdiction by Dodd-Frank) by applying a questionable interpretation of ECOA to impose disparate impact liability against auto finance companies.

In April 2017, the D. C. Circuit affirmed the D.C. federal district court’s April 2016 denial of the CFPB’s petition to enforce a CID issued in 2015 to the Accrediting Council for Independent Colleges and Schools (ACICS).  The district court ruled that the CFPB exceeded its statutory authority by issuing the CID because the ACICS’s accreditation process for-profit schools, which was the focus of the CID, was not a financial product or service, and had no connection to a for-profit school’s private student lending practices.  In affirming the denial of the CFPB’s petition to enforce the CID, the D.C. Circuit declined to reach the broad question of whether the CFPB had statutory authority “to investigate the area of accreditation at all” and instead limited its analysis to whether the CID satisfied the CFPA  requirement that “[e]ach [CID] shall state the nature of the conduct constituting the alleged violation which is under investigation and the provision of law applicable to such violation.”  It concluded that the Notification of Purpose in the ACICS CID failed to adequately state the unlawful conduct under investigation or the applicable law.