Weekly RoundUp
November 17, 2022

CFPB Issues Guidance on Investigation Practices by Consumer Reporting Agencies

In This Weekly Roundup Issue. The Consumer Financial Protection Bureau (CFPB) issued guidance on investigation practices by consumer reporting agencies; the CFPB finalized a rule regarding key nonbank supervision decisions; the CFPB also published a complaint bulletin analyzing a rise in crypto-asset complaints; and the Financial Industry Regulatory Authority (FINRA) is urging firms to focus on succession planning. These developments are discussed in more detail below.

The Roundup will be on hiatus during the week of November 21 due to the Thanksgiving holiday. We will resume publication on Thursday, December 1.

Regulatory Developments

CFPB Issues Guidance on Investigation Practices by Consumer Reporting Agencies

On November 10, the CFPB issued a Consumer Financial Protection Circular (Circular) affirming that consumer reporting agencies (CRAs) and information furnishers must investigate all disputes that are not frivolous or irrelevant, and may not limit a consumer’s dispute rights by requiring a specific format or attachment (e.g., specific form, copy of a police report) beyond what statute and regulation permits. The Circular also affirms that CRAs must provide to the information furnisher “all relevant information” regarding the dispute that the CRA receives from the consumer, and that federal and state consumer protection enforcers can bring claims against companies that fail to conduct reasonable investigations and resolve consumer report disputes.

“One wrong piece of information on a person’s credit report can have destructive consequences that follow a consumer for years. Companies that fail to properly address consumer disputes in accordance with the law may face serious consequences.”
- CFPB Director Rohit Chopra

CFPB Finalizes Rule Regarding Key Nonbank Supervision Decisions

On November 10, the CFPB finalized changes to its nonbank supervision procedural rule, which allows the CFPB to publicly publish its risk-based final decisions and orders establishing supervisory authority over certain nonbank entities. In response to public comment, the final rule provides that the CFPB will not publish information that would fall within two Freedom of Information Act exemptions that protect confidential commercial information and personal privacy. The CFPB can also withhold information from its decisions and orders for good cause. The final order also extends the time that a nonbank entity has to express its views about whether an order should be publicly released from 7 to 10 business days. These changes to the final rule relate only to the CFPB’s initial decision to extend supervision to a nonbank entity and do not affect the confidentiality of any ensuing supervisory examination or any other aspect of the supervisory process.

CFPB Publishes Bulletin Analyzing Rise in Crypto-Asset Complaints

On November 10, the CFPB released a complaint bulletin, highlighting a sharp rise in complaints received by the CFPB relating to crypto-assets. Consumer complaints focused primarily on frauds, scams, account hacks, theft, and lost savings but also issues with executing transactions, transferring assets between exchanges, accessing funds, technical issues with platforms or platform failures, identity verification issues, security holds, frozen accounts, and poor customer service. In the bulletin, the CFPB acknowledged certain crypto-asset risks, including: romance scams and “pig butchering” (scammers spend time gaining the victim’s confidence, trust, romantic affection, and play on a victim’s emotions to gain access to the victim’s assets); fraudulent transactions; difficulty obtaining restitution in the event of account hack or fraud; identification risk related to the public nature of blockchain technology; and higher asset volatility with fluctuating values. The CFPB advised consumers to beware common scams and to report suspicious FDIC insurance claims and other complaints to the CFPB.

FINRA Urges Firms to Focus on Succession Planning

FINRA recently published Regulatory Notice 22-23, providing guidance regarding firm and representative succession planning, including relevant FINRA rules and administrative processes and questions firms can consider when developing and implementing their succession plans. FINRA’s focus on succession planning has been driven by industry demographic trends, which indicate that nearly 30% of registered representatives are approaching retirement age, and the impact of the COVID-19 pandemic. 

Read the client alert for more information and steps firms and their principals should consider when developing their succession plans.

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Samantha M. Kirby
William McCurdy

Josh Burlingham