Life cycle of an enforcement action

Commencing enforcement investigations

Enforcement relies on a number of sources of information to identify potential issues that may warrant opening an investigation, including:

• Consumer complaints
• The Bureau’s whistleblower hotline
• Referrals from federal regulators and other local, state, and federal agencies
• Market intelligence, and
• The results of supervisory exams

The Bureau’s Enforcement Director or one of his or her deputies approves opening a Bureau investigation. In assessing whether to open an investigation, Enforcement weighs a number of factors, including, but not limited to, whether:

• There is a plausible set of facts that, if proven, would amount to a violation of one or more federal consumer financial laws
• There is reason to believe that one or more specific entities may be engaging in the conduct described in those facts
• There is evidence of a magnitude of harm that justifies investment of resources
• There are sufficient resources available to properly address the matter, and
• The devotion of those resources is consistent with the strategic planning and articulated priorities or warrants a conscious departure from those plans and priorities

The existence of an investigation does not mean that the subject has violated the law.

Fact gathering

We are authorized to conduct investigations before instituting judicial or administrative adjudicatory proceedings under Federal consumer financial law. Enforcement uses investigations to gather facts and identify violations of federal consumer financial law to determine whether a public enforcement action is necessary. Specifically, the Consumer Financial Protection Act authorizes us to issue investigational subpoenas known as civil investigative demands (CIDs) when looking into potential violations of law. A CID may demand, among other things, documents, emails, reports, answers to written questions, and oral testimony. Each CID is required to state the nature of the conduct constituting the alleged violation which is under investigation and the provision of law applicable to such violation. CIDs issued by us set out this information in a section known as the “notification of purpose.” CID recipients have a statutory right to petition the Bureau’s Director for an order modifying or setting aside a CID. If necessary, we may seek to enforce a CID in federal court.

Hearing from subjects of investigation

The Notice and Opportunity to Respond and Advise (NORA) process is used by Enforcement, at its discretion, to afford individuals and entities under investigation an opportunity to present their positions to Bureau staff before a lawsuit is filed against them. The NORA process strikes a balance between fairness to those under investigation and protection of the public interest. The discretionary framework of the NORA process allows us to retain our ability to respond to unlawful conduct in a timely fashion.

The primary objectives of the NORA process are to:

• Allow Persons under investigation the opportunity to be heard before the filing of a lawsuit in situations where delay will not unduly harm consumers
• Help ensure that enforcement actions are based on sound policy, and that they effectively further our priorities
• Alert us to potential unintended and undesirable consequences of enforcement actions, and
• Help ensure that we are aware of any material facts relevant to both its investigations and contemplated enforcement actions

Public enforcement actions

When warranted by the investigation, Enforcement may seek authority from the Director to take a public enforcement action. Alternatively, Enforcement may close the investigation without taking public action or refer the matter to the Office of Supervision Examinations to resolve the matter through our supervisory process.

If the Director authorizes a public enforcement action, we may bring the action in state or federal court or institute an administrative adjudication proceeding. Administrative adjudication proceedings are formal adversarial proceedings conducted by an administrative law judge, who issues a recommended decision to the Bureau’s Director. The Director issues a final decision, either adopting or modifying the administrative law judge’s recommended decision.

When we enforce the law, we or a court may order the defendant to take action to remedy the harm it caused consumers. This can include requiring the person or company to compensate its victims for this harm by providing consumer redress. Obtaining consumer redress is a top priority in any Enforcement action. In addition, we also have obtained a wide range of injunctive relief designed to stop unlawful conduct and prevent future violations. In some instances that relief has included banning individuals and companies from future participation in the marketplace.