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Last week, the Federal Trade Commission ("FTC") and the Consumer Financial Protection Bureau ("CFPB") entered into a memorandum of understanding in order to outline how the two agencies will share responsibility for protecting consumers in the financial products and services sector.
The CFPB, which was an agency born out of the 2010 financial collapse and the ensuing Dodd-Frank Wall Street Reform and Consumer Protection Act, is an autonomous federal agency located within and funded by the Federal Reserve. The focus of the CFPB, according to CFPB director, Richard Cordray, is "nonbank" financial companies — credit unions, mortgage brokers and servicers, foreclosure relief services, and credit card issuers, for example — that have historically fallen outside the purview of regulators and consumer protection agencies. The CFPB has authority to implement and enforce Federal consumer financial law, to conduct examinations, to collect and track consumer complaints about consumer financial goods and services, and to ensure that the markets for consumer financial products and services are fair, transparent and competitive. Businesses generally exempt from the Bureau's jurisdiction include car dealers that sell, service and lease vehicles, merchants and retailers, real estate brokers, manufactured and modular home retailers, accountants and tax preparers, and lawyers.
The CFPB's new memorandum of understanding with the FTC, signed on January 20, 2012, defines how the agencies will coordinate their enforcement efforts. Highlights of the memorandum include:
- an agreement that the FTC and CFPB will inform each other before they start an investigation of any consumer financial products or services company — other than a bank, thrift, federal credit union, or other entity that is excluded from the FTC's jurisdiction — so that they do not investigate the same company for the same reason;
- provisions to ensure that the FTC and the CFPB do not bring duplicative law enforcement actions;
- an agreement that the two agencies will provide each other with notice prior to initiating and settling lawsuits;
- an initiative to share information about financial products and services companies; and
- a deal to coordinate rulemaking and educational efforts.
In announcing the agreement, David Vladeck, the Director of the FTC's Bureau of Consumer Protection, stated: "Consumers, businesses, and taxpayers can be assured we're protecting consumers without wasting resources or imposing undue burdens on the marketplace."
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