How Stakeholders Can Navigate the CFPB’s Regulation by Headline

The CFPB emphasized that targeting large firms, even those capable of challenging CFPB actions in court, is better for enforcing the rules on the industry rather than to “strong arm small firms” into settlements, as punishing large or repeat offenders gives the agency more credibility.^[1] The CFPB is exploring ways other than imposing fines to rein in illegal practices, ranging from publicly shaming companies, limiting a firm’s growth or banning a company from opening new accounts, limiting deposit insurance for banks, as well as imposing fines and liability on company employees.^[2]

Director Chopra’s regulation by headline has no industry focus, as he has targeted banks, tech companies, and many more. He outwardly abashed several banks by name as repeat offenders, including Wells Fargo, Citigroup, JP Morgan Chase and American Express; stating that all firms had violated consumer protection laws at least three times.^[3] In a consent order against JPay LLC, Director Chopra named the private equity firm that owns JPay, “effectively punishing that firm for portfolio company activity without any due process.”^[4] Director Chopra’s ongoing aggressive tactics perpetuate the current uncertain regulatory environment that consumer finance companies are operating in.

Recent CFPB Headline-Driven Penalties  

A CFPB report from January 2022 found that most consumer complaints to the Big Three credit reporting agencies (Equifax, Experian, and TransUnion) do not receive relief and are instead dismissed.^[5] Director Chopra claimed in tweets that the reason for this was that the “credit reporting oligopoly doesn’t compete on customer service or accuracy” yet get to “make big money off our data.”^[6] He further suggested that these companies do not fully investigate complaints as required by law, tweeting that “the Big Three oligopoly” is required “to actually review and investigate disputes and potential errors, instead of using excuses to dismiss or ignore them altogether.”^[7]

Chopra makes waves in publicly blaming the lack of competition in the market for the low relief rates. In response, The Washington Post published articles titled, “Credit bureaus drew more than half of consumer complaints to CFPB in past two years,”^[8] and “Why it’s so hard to fix errors on your credit report.”^[9] Other news outlets also published negative headlines following the release, such as: “Credit Reporting Companies Under Fire (Again),”^[10] and “CFPB Slams Big 3 Credit Bureaus for Excuses, “Deficiencies” and Failure.”^[11]

As the CFPB expands beyond the agency’s traditional boundaries, companies may find it difficult to navigate their business growth with this changing consumer finance regulatory space and newfound media headline risk.

Our Financial Services Sector Public Affairs team is well-positioned to assist consumer finance companies with building comprehensive communications campaigns that promote their reputation among the CFPB, other Washington regulatory agencies, and consumers. To effectively protect a company against these attacks, our strategies could include:

• Draft responses to the CFPB prior to infiltration: With so much misinformation and scrutiny of the industry, repositioning your narrative through data, anecdotal success stories and consumer protections will be essential. Use this opportunity to educate regulators and consumers on the value you provide to the consumer finance industry and the consumers you serve.
• Highlight other sectors of the company that can balance the perceived negativity: It may be advantageous to highlight other lines of business to provide a fuller, more holistic understanding to stakeholders of who you are and your broader value proposition.
• Acknowledge the criticisms and both act and show the progressive steps to improve: Director Chopra’s continued enforcement actions and/or press releases should be expected for those under scrutiny. Once your company is targeted, it is important to acknowledge the enforcement action or press release and communicate that an effective strategy is in place to rectify the identified issues. This is not only the correct action to take for customers, but also mitigates reputational damage. In this tumultuous regulatory environment, your company should have a holding statement prepared.
• Create a crisis communications playbook: Enforcement actions and headline are inseparable. It is important to deploy a proper communications strategy to avoid further risk and reputational challenges to your brand. FTI Consulting can create a crisis communications playbook to lay out protocols for any regulatory action proof points, talking points and messaging. FTI Consulting can also develop media strategy and protocol for enforcement action to assist in identifying key objectives and overarching media strategy following the regulatory action, including identifying influential reporters in advance to educate on background.

We are well-equipped to help create your proactive public affairs strategy that will protect your business operations from these growing regulatory and political risks. We stand ready to assist. Contact us today.

The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.

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