Collector – January 2020 - 20

Here are five CFPB issues the
accounts receivable management
(ARM) industry will be watching closely
in 2020.

LEADERSHIP STRUCTURE
QUESTIONS
In October 2019, the U.S. Supreme Court
announced it would take on Seila Law v.
Consumer Financial Protection Bureau, a
case that challenges the constitutionality
of the CFPB's leadership structure.
An important note: This case is not, as
many believe, about whether the bureau
itself is unconstitutional, rather it's an
examination of whether the provision of
the law allowing the president to remove
the agency's director only "for cause"
violates the constitutional separation
of powers.
"The Supreme Court, in granting
cert, directed the parties to address the
question whether the provision at issue
can be severed from the Dodd-Frank Act,
in the event that the provision is found
unconstitutional," said Anthony DiResta,
partner with Holland & Knight. "My
prediction is that the majority of the court
will find the provision problematic, as it
gives the CFPB director broad power over
the financial services industry that resides
in one individual and that is not found in
deliberative bodies like the FTC, which
operates as a commission."
The House appears to be split along party
lines on this question, with Democrats
generally supporting the current
structure of the bureau. That said, CFPB
Director Kathy Kraninger-a Republican
appointee-has said she believes the DoddFrank Act provision is unconstitutional. 
When it comes to the Supreme Court,
we know that while serving on the U.S.
Court of Appeals for the D.C. Circuit,
Justice Brett Kavanaugh agreed that the
CFPB's structure was unconstitutional,
describing the director's authority
as "power that is massive in scope,
concentrated in a single person, and
unaccountable to the President." In
addition, the other conservatives on the

20

court view expansive administrative agency
power with suspicion.
The big unknown is: If the court decides
to sever the director position, will this
unravel prior bureau decisions or actions,
such as the debt collection rulemaking?
It's an interesting question, noted DiResta,
who pointed out that if the court goes this
way, prior actions could be seen as having
been blessed by a director acting without
constitutional authority.
"There are a lot of questions, and it's
unclear if the court will pick that up or
not," he said.
Sarah J. Auchterlonie, shareholder with
Brownstein Hyatt Farber Schreck, LLP, and
an ACA International consultant, said she
thinks the bureau would approach
this practically.
She recalled the 2014 National
Labor Relations Board v. Noel Canning
case in which the U.S. Supreme Court
invalided President Barack Obama's
recess appointments to the National
Labor Relations Board because they did
not meet the requirements of the Recess
Appointments Clause. Former CFPB
director Richard Cordray had also been
appointed to the bureau at that time, and
he worked hard to get Senate confirmation.
"They were concerned about the
ramifications of having an illegal director
so as soon as he was authorized, he ratified
everything that was done prior to his
Senate confirmation. And that was the end
of it," Auchterlonie said.
For that reason, Auchterlonie predicts
the Supreme Court's decision won't have
an impact on the bureau's debt collection
rulemaking, and the CFPB will continue to
operate as usual no matter which way the
court goes in the Seila case.
Big cases like this tend to get decided
toward the end of the Supreme Court's
term-just before its summer recess-and
accordingly DiResta speculated we won't
get a decision from the court until May
or June. If the Supreme Court rules that
the CFPB director can be removed at the
president's discretion and President Trump
is not reelected in November, Democrats

would have the opportunity to replace
Kraninger with someone "more like
Cordray," DiResta said.

DEFINING "ABUSIVE" UNDER
DODD-FRANK
Many ARM industry participants want
more guidance from the bureau on the
definition of "abusive" acts under the
Dodd-Frank Act, potentially through
a new policy or rulemaking. Unfair,
deceptive, or abusive acts or practices
(UDAAPs) are a regulatory focal point,
especially when it comes to CFPB
enforcement actions.
"Deception and unfairness have a long
history of case law and guidance, but there
is no clear guidance on the four types of
abusive practices," said ACA member Lucy
Morris, partner at Hudson Cook LLP.
"The bureau has different tools to declare
an unfairness standard abusive, but it
primarily uses its enforcement authority to
do so."
Based on what ACA has seen over the
last few years, an act may be abusive under
the Dodd-Frank Act when it interferes
with the consumer's ability to understand
a term or a condition or takes advantage
of the consumer's lack of understanding.
For instance, creating an artificial sense
of urgency to induce borrowers to make a
payment or charging fees in excess of what's
allowed by law might be abusive acts.
According to the CFPB, an act or
practice is abusive when it:
1. Materially interferes with the ability
of a consumer to understand a term
or condition of a consumer financial
product or service; or
2. Takes unreasonable advantage of:
a. A consumer's lack of understanding
of the material risks, costs, or
conditions of the product or service;
b. A consumer's inability to protect his
or her interests in selecting or using
a consumer financial product or
service; or
c. A consumer's reasonable reliance
on a covered person to act in his or
her interests.

ACAINTERNATIONAL.ORG


http://www.ACAINTERNATIONAL.ORG

Collector – January 2020

Table of Contents for the Digital Edition of Collector – January 2020

Upfront
Industry News
Best Practices
FYI
Collection Tips
Radical Redesigns
Four State Legislative Trends to Watch
Calendar
Honor Roll
Education Spotlight
Our International Reach
Tech Times are Changing
Exceptional Programming and Speakers Pay Off
Looking Forward to Monday Morning
Contextualizing Consumer Complaints
Another Look at Written Disputes
ACA SearchPoint
Ad Index
Membership
Last Word
Collector – January 2020 - Cover1
Collector – January 2020 - Cover2
Collector – January 2020 - 1
Collector – January 2020 - 2
Collector – January 2020 - 3
Collector – January 2020 - Upfront
Collector – January 2020 - 5
Collector – January 2020 - Industry News
Collector – January 2020 - 7
Collector – January 2020 - 8
Collector – January 2020 - 9
Collector – January 2020 - 10
Collector – January 2020 - 11
Collector – January 2020 - Best Practices
Collector – January 2020 - 13
Collector – January 2020 - FYI
Collector – January 2020 - 15
Collector – January 2020 - Collection Tips
Collector – January 2020 - 17
Collector – January 2020 - 18
Collector – January 2020 - 19
Collector – January 2020 - 20
Collector – January 2020 - 21
Collector – January 2020 - 22
Collector – January 2020 - 23
Collector – January 2020 - Radical Redesigns
Collector – January 2020 - 25
Collector – January 2020 - 26
Collector – January 2020 - 27
Collector – January 2020 - Four State Legislative Trends to Watch
Collector – January 2020 - 29
Collector – January 2020 - 30
Collector – January 2020 - 31
Collector – January 2020 - Calendar
Collector – January 2020 - Honor Roll
Collector – January 2020 - Education Spotlight
Collector – January 2020 - 35
Collector – January 2020 - Our International Reach
Collector – January 2020 - 37
Collector – January 2020 - Tech Times are Changing
Collector – January 2020 - 39
Collector – January 2020 - 40
Collector – January 2020 - 41
Collector – January 2020 - Exceptional Programming and Speakers Pay Off
Collector – January 2020 - 43
Collector – January 2020 - 44
Collector – January 2020 - Looking Forward to Monday Morning
Collector – January 2020 - Contextualizing Consumer Complaints
Collector – January 2020 - 47
Collector – January 2020 - 48
Collector – January 2020 - 49
Collector – January 2020 - Another Look at Written Disputes
Collector – January 2020 - 51
Collector – January 2020 - ACA SearchPoint
Collector – January 2020 - Ad Index
Collector – January 2020 - Membership
Collector – January 2020 - 55
Collector – January 2020 - Last Word
Collector – January 2020 - Cover3
Collector – January 2020 - Cover4
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