Despite an escalation of longstanding threats from big Wall Street banks and other special interests -- including renewed demands to the new Congress to gut the Consumer Financial Protection Bureau and even to the new President to fire its extraordinary director -- the CFPB continues to protect consumers and protect them well.
This week it sued TCF Bank over deceptive overdraft marketing schemes. The TCF complaint notes its CEO even brazenly named his boat "Overdraft." Under 2010 pre-CFPB "Overdraft Rules" established by the previous regulators, the default is that consumers cannot overdraft their debit cards at a coffee shop or store or an ATM machine. Consumers must affirmatively opt-in to so-called "overdraft protection" where banks may impose a fee of up to $35 for the "privilege" of covering purchases as small as $3.00. As CFPB director Richard Cordray explains in the CFPB's release, TCF even "celebrated" its various staff marketing contests to encourage consumers to affirmatively sign up (or opt-in) to Overdraft Protection (the contests appear very similar to Wells Fargo sign-up competitions that were part of a scheme that resulted in a $185 million civil penalty):
“Today we are suing TCF for tricking consumers into costly overdraft services in order to preserve its bottom line. TCF bulldozed its way through protections against automatic overdraft enrollment and then celebrated its unusual sign-up success. With today’s action, we are standing up for consumers’ right to understand and choose what services they receive.”
U.S. PIRG has long been concerned with TCF Bank, which targets all consumers but looks at students as lucrative new customers; the University of Minnesota football stadium is even named for the bank. Our "how to avoid overdraft fees" tips explain if you do not opt-in, or opt back out, that the bank must either pay your debits or ATM withdrawals with no penalty fee or decline them at point of sale. More tips from CFPB.
And in what could eventually be a much bigger case, directly affecting students, the CFPB separately sued Navient, the massive student loan servicer and Sallie Mae spinoff, for "failing" students at every step of the repayment process. Our release from USPIRG Higher Education Director Chris Lindstrom is here. CFPB was joined in this action by the attorneys general of Illinois and Washington State, which filed companion complaints. According to that CFPB release:
"For years, Navient, formerly part of Sallie Mae, created obstacles to repayment by providing bad information, processing payments incorrectly, and failing to act when borrowers complained. Through shortcuts and deception, the company also illegally cheated many struggling borrowers out of their rights to lower repayments, which caused them to pay much more than they had to for their loans. The Bureau seeks to recover significant relief for the borrowers harmed by these illegal servicing failures."
The CFPB has a special office that protects servicemembers and veterans and their families and enforces special laws for them. Its complaint goes on to explain harms to severely disabled veterans due to Navient's unfair practices:
"Student loan payments are reported to credit reporting companies. Severely and permanently disabled borrowers with federal student loans, including veterans whose disability is connected to their military service, have a right to seek loan forgiveness under the federal Total and Permanent Disability discharge program. Navient misreported to the credit reporting companies that borrowers who had their loans discharged under this program had defaulted on their loans when they had not."
The CFPB, since its establishment in July 2011, has refunded or provided other relief totaling over $11.8 billion dollars to 29 million consumers harmed by financial fraud and schemes such as the ones above. It continues to protect consumers even as powerful special interests demand it be defanged and defunded or even that the new President illegally fire director Cordray. As I recently told consumer columnist Bob Sullivan (Marketwatch):
"But how do you fire an effective official who has protected consumers and families from financial predators exactly as Congress asked him to do? You ignore the law and you ignore the voters’ demand for an unrigged financial system. We hope Mr. Trump has better judgment than that.”
Firms that benefited from the lax regulatory environment that helped fuel the 2008 financial collapse -- resulting in millions of consumers losing homes or jobs and millions more losing trillions of dollars in retirement savings -- are trying to convince the new Congress and the new President that the financial crisis is over and it is time to re-rig the financial system against consumers. These two enforcement actions this week show that crime in the suites is still rampant; that CFPB is doing a good job and that it is needed now, more than ever. The idea of the CFPB needs no defense, only more defenders.