Banking and Finance Law Daily Consumer data reporting website must answer CFPB’s information demand
Wednesday, June 7, 2017

Consumer data reporting website must answer CFPB’s information demand

By Richard A. Roth, J.D.

The Consumer Financial Protection Bureau has the authority to issue a civil investigative demand to a company that posts public record information about consumers on a website, a U.S. magistrate judge has determined. The CID adequately described what potential Fair Credit Reporting Act violations were under investigation, the judge said, and otherwise met the requirements for an enforceable demand (CFPB v. The Source for Public Data, LP, June 6, 2017, Horan, D.).

The Source for Public Data describes its business as operating a website that allows a user to search public records for information that matches criteria the user specifies. The company says it does not alter, assemble, or merge any records and that it makes no determinations about whether a public record is correct or relates to a specific individual. The CFPB has demanded information as part of an investigation into whether Public Data, or any other company, is violating the FCRA provisions on public record information. The bureau previously denied an administrative challenge to the CID (see Banking and Finance Law Daily, March 6, 2017).

Objections to CID. Public Data initially raised four objections to the CID, the judge said:

  1. The CFPB exceeded its statutory authority.
  2. The CFPB did not have jurisdiction to issue the CID under any federal consumer financial law.
  3. The CID did not adequately describe the nature of the conduct the bureau is investigating.
  4. The CID is "grossly overbroad."

However, the adequacy of the bureau’s notice was the main point of argument.

Adequate notice. The largest part of the judge’s analysis addressed whether the CID’s Notification of Purpose was adequate to identify the conduct under investigation and the relevant law. Public Data relied on the recent opinion in CFPB v. Accrediting Council for Independent Colleges & Schools (see Banking and Finance Law Daily, April 21, 2017) to support its claim that the notice was inadequate.

In CFPB v. ACICS, a U.S. district judge refused to enforce a CID the bureau served on a college accrediting organization, as part of an investigation into student loan practices, because the Notification of Purpose was inadequate, failing to describe either the actions being investigated or the law that possibly was being violated. It did not provide a basis for a court to decide whether the bureau was acting under its statutory authority.

The CID served on Public Data was a close case, the judge said, but it was good enough. For one thing, while the bureau conceded that it had no authority over college accreditations in ACICS, it clearly had broad authority over credit reporting agencies. The Notice of Purpose was adequate to provide "fair notice of an investigation with generally defined boundaries and a purpose articulated in broad terms." That was all that was necessary.

Jurisdiction not "plainly lacking." This was not the right time for Public Data to challenge whether it was a consumer reporting agency that was subject to the FCRA and the bureau’s authority, the judge added. When the issue is whether a CID is to be enforced, the question is whether the CFPB has a plausible reason to believe that Public Data has information relevant to the investigation. That hurdle had been cleared.

The case is No. 3:17-mc-16-G-BN.

Attorneys: Erin Mary Kelly for the Consumer Financial Protection Bureau. Ronald Irvin Raether, Jr. (Troutman Sanders LLP) and John E. Collins (Burleson, Pate & Gibson, LLP) for The Source for Public Data, LP.

Companies: The Source for Public Data, LP

MainStory: TopStory CFPB EnforcementActions FairCreditReporting TexasNews

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