On the heels of her National Journal interview, Ms. Warren today posted an entry on the White House blog providing additional detail on how she is working with industry leaders to leverage new technology to empower consumers and regulatory agencies such as the Consumer Financial Protection Bureau.
Elizabeth Warren, the person charged with establishing the new Consumer Financial Protection Bureau (“CFPB”), discussed new technology investigatory techniques in a recent interview with National Journal. Warren, on a Silicon Valley tour to further develop these new methods, described the use of “crowd-sourcing” and other real-time information gathering techniques to quickly identify issues impacting consumers. According to Warren, utilizing the ability to amass information quickly will result in faster and more efficient investigations within the CFPB and will require that banks and other covered institutions be more responsive to regulators and consumers.
Utilizing new technology in regulatory investigations certainly makes sense, but harnessing the information and resources necessary to use it in a meaningful manner will be a challenge. Only time will tell if Ms. Warren is successful in leveraging new technology. What is clear, however, is that Ms. Warren is crafting an agenda for the CFPB that will focus on swiftly identifying issues that impact consumers and putting regulatory and market pressures on businesses to ensure compliant practices.
Click here to read more about Ms. Warren and her appointment in the Kelley Drye client advisory.
This post was written by Jeffrey Kauffman and Jennifer Kasman.
Elizabeth Warren spoke at the White House today during the kickoff event of the Tuesday Talks series, a weekly interactive video chat on the White House website. During the session, Elizabeth Warren addressed several questions regarding her role with the new Bureau of Consumer Financial Protection (“CFPB”). As part of her comments, Warren described the past few years as the “wild west of consumer credit,” a time when financial institutions took an “anything goes” approach to offering consumer financial products. She believes that these practices have resulted in financial struggles for families who cannot pay debts or obtain additional credit. She also reiterated her position regarding the need for reform to ensure that financial products are easy for consumers to read, understand, and compare. On multiple occasions, Warren firmly stated that consumer products with “tricks and traps” will not be tolerated and indicated that people who expect to make big profits off non-compliant offers will be aggressively pursued. She stated that the regulatory scrutiny will come from the CFPB, which will serve to integrate a previously fractured web of agencies, and by partnering with state attorneys general.
Warren also commented on institutions that attempt to offset lost revenue from implementation of new consumer-friendly regulations with other charges and fees to consumers (for example, charging consumers increased fees for checking accounts). She described a major (unnamed) financial institution that recently sent a letter to shareholders indicating that the new consumer protection laws cost the company $650 million dollars in quarterly earnings. Warren said that she believes that this was $650 million dollars that “stayed in the hands of American families….from merely banning a few bad practices.” Clearly, this is a sign that Warren and others within the CFPB will take an aggressive posture towards companies seeking to recoup on lost revenue. On that note, Warren was careful to state that the CFPB does not want to solely regulate violations after they occur, but proactively supervise companies in advance to ensure that consumer laws and rules are being followed.
Click here to read more about Ms. Warren and her appointment in the Kelley Drye client advisory.
The FTC released a proposed policy statement with a call for public comments on October 4, 2010. The policy statement clarifies when the FTC will take action under the Fair Debt Collection Practices Act (FDCPA) and the FTC Act against companies collecting the debts of deceased consumers.
In general, the FDCPA permits collectors to contact the decedent’s spouse or the executor or administrator of the decedent’s estate. State probate laws have expanded the list of persons authorized to pay a decedent’s debts beyond the FDCPA categories. The proposed enforcement policy statement seeks to reconcile the FDCPA’s requirements with state probate law developments by stating that the FTC will not take enforcement action for violations of Section 805(b) of the FDCPA against collectors communicating with a person authorized to pay the debts from assets in the decedent’s estate.
The proposed statement also clarifies how a debt collector may locate the appropriate person with whom to discuss the decedent’s debt and emphasizes that misleading consumers about their personal obligation to pay a decedent’s debt is a violation of the FDCPA and Section 5 of the FTC Act. The statement notes that in order to avoid giving the misleading impression that the person is personally liable or could be required to pay the decedent’s debt with his own assets or jointly held assets, debt collectors may need to affirmatively disclose that this is not the case.
The FTC is accepting public comments on the proposed policy statement until November 8, 2010.
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