In July 2013, Morrison & Foerster published the client alert "How to Be a Good Corporate Citizen CFPB Style."

Summary:

On June 25, 2013, CFPB issued Bulletin 2013-06 identifying "responsible business conduct" that may impact the exercise of its "enforcement discretion." The Bulletin specifies the following four broad categories of conduct that the CFPB "may favorably consider":

  • Self-policing: The entity's investment in a "robust compliance system" that "facilitate[s] early detection of potential violations," including how the conduct was detected, procedures in place to prevent, identify or limit the identified wrongful conduct, whether executives and others high up in the chain of command knew of or participated in that conduct, and whether there were any deficiencies in compliance procedures more generally.
  • Self-reporting: The entity's "prompt and complete" reporting to the CFPB and other regulators as well as to impacted consumers of all violations or even potential violations.
  • Remediation: The entity's efforts to provide "full redress" for impacted consumers, implement procedures to prevent recurrence, and change future conduct. The CFPB will consider how long it took the entity to stop the offending conduct and begin remediation after the conduct was identified, whether there were any consequences for responsible individuals, whether the remediation addressed all monetary and non-monetary harm to impacted consumers, and whether there were any improvements to policies and procedures.
  • Cooperation: The entity's interactions with the CFPB once the CFPB becomes aware of a potential violation must go "above and beyond what the law requires" to receive credit. The CFPB will consider whether the entity undertook a thorough review of the misconduct, promptly made the results of that review available to  the CFPB, created a "complete and thorough written report detailing the findings of its review," and voluntarily disclosed of material information not requested by the CFPB.

Click here to read the full alert.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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