The CFPB issued a final rule implementing the requirement under the Dodd Frank Act to establish and maintain a civil penalty fund. The Dodd Frank Act requires the CFPB to deposit any civil penalty it obtains against any person in any judicial or administrative action under federal consumer financial laws. In announcing the rule, the CFPB noted that the rule "creates a transparent process for allocating money from the Bureau’s Civil Penalty Fund[.]" The final rule sets forth the CFPB’s interpretation of what types of payments to victims are appropriate and establishes procedures for allocating funds for payments to victims and for consumer education and financial literacy programs. For example, the rule establishes a Civil Penalty Fund Administrator and a Civil Penalty Fund Governance Board. The CFPB also released an overview of the civil penalty fund as well as FAQs on the fund. The CFPB is also seeking public comments on management of the fund. For example, under the rule, victims are entitled to payment from the civil penalty fund only if a final order in a CFPB enforcement action imposed a civil penalty for the violation that harmed the victim. The CFPB is seeking public comment on whether it should make payments to a broader category of victims—victims of any type of "activities for which penalties have been imposed even if no enforcement action imposed a civil penalty for the particular activities that harmed the victim.
Alert April 30, 2013