In a recent legal development, the U.S. District Court for the Northern District of Illinois ruled in favor of the Consumer Financial Protection Bureau (CFPB), dismissing a counterclaim brought forward by a Credit Reporting Agency (CRA). The CRA had contended that it was entitled to relief in the amount of a $5 million residual redress payment it had formerly settled to the CFPB under a 2017 Consent Order.
This decision, delivered by the U.S. District Court, paves the path for increased enforcement responses by the CFPB in similar disputes and goes on to underscore the pivotal role consent orders play in shaping responses to litigation in the financial services industry.
In the said case, the CRA had previously agreed to pay a total of $8 million, apropos of a 2017 Consent Order, following allegations of violating consumer rights under the Fair Credit Reporting Act (FCRA). The $8 million payment comprised of $3 million towards a civil penalty and $5 million in the form of redress to consumers in an affected class.
Pertinently, as part of the Consent Order, the CRA had reserved the “right to ask the Bureau to remit any remaining residual redress funds after all consumers were paid.” However, the court has now invalidated this claim by the CRA, reinforcing the solid legal basis and authority of CFPB’s stipulations under the Consent Order. As such, it provides critical insights for legal professionals, especially those representing companies in the financial services spectrum, to anticipate enforcement actions and compliance measures by CFPB.
As a result of the court’s decision, the CRA will not receive a refund from the said residual redress payment, thereby setting a precedent for similar cases in the future.