CFPB To Create Repeat Offender Registry

The Consumer Financial Protection Bureau finalized a rule creating a registry of repeat corporate offenders to deter further infractions.

The goal is to identify financial institutions that have violated consumer laws and government or court orders on multiple occasions, helping it hold lawbreaking companies accountable.

Court orders and agency actions against companies that have broken the law are not comprehensively tracked, the Bureau says, giving offenders leeway to keep moving forward with scams, schemes, and other illegal conduct.

“When companies believe that violating the law is more profitable than following it, this totally undermines public trust and harms businesses who are playing by the rules,” CFPB Director Rohit Chopra said in prepared remarks.

Now, nonbank financial companies caught violating consumer law must register with the CFPB and report certain final agency and court orders and judgments to the Bureau.

They must then provide an attestation from a senior executive that the company is complying with any relevant orders.

The CFPB expects that the registry will be used by state attorneys general, state regulators, and other law enforcement agencies, and estimates that between 1,500 and 7,750 companies will be subject to the rule.

Unlike mortgage loan originators, who must be registered and licensed thanks to the SAFE Act passed in 2008, many financial companies are not regulated this way.

The new rule is the first time the CFPB has utilized its authority to register nonbank entities.

The business world has largely opposed the plan. A group of six trade groups denounced it in a letter last year.

“Naming and shaming companies and their executives may win headlines and collecting consent orders may give plaintiffs’ attorneys a road map for litigation, but neither helps consumers,” it reads.