Consumer Financial Protection Bureau Director Joins Law Enforcement Focus on Corporate Recidivism

The Consumer Financial Protection Bureau (CFPB) has made it clear that corporate recidivism is now a top priority of its enforcement efforts. On March 28, 2022, CFPB Director Rohit Chopra delivered a lecture, titled Reining in Repeat Offenders at the University of Pennsylvania Program on Regulation. During his lecture, Chopra indicated that the CFPB, which enforces consumer financial protection laws, will seek to deter corporate recidivism by imposing tougher sanctions on institutions that have previously failed to comply with orders issued by courts or regulators. Chopra’s remarks follow similar indications made by other law enforcement leaders, including Deputy Attorney General Lisa Monaco, who emphasized a focus corporate recidivism during her keynote address at ABA’s 36th National Institute on White Collar Crime in October 2021. By way of the address and a U.S. Department of Justice memorandum, Monaco directed prosecutors to consider the full criminal, civil, and regulatory records of companies that are targets of criminal investigations, as well as their affiliates, rather than just the specific conduct at issue in that particular investigation in order to assess a company’s overall commitment to compliance when pursuing prosecutions and considering corporate resolutions.

More specifically, Chopra called on all federal regulators to impose what he called “structural remedies” on “repeat offenders”—institutions that have been found to have violated laws, regulations, or orders—in order to ensure compliance on a going-forward basis. The remedies he encouraged federal regulators to consider include (1) banning certain types of business practices, (2) requiring divestiture of product lines that have been involved in repeat offenses, and (3) revoking certain government-issued licenses. 

To help address the issue of repeat offenders, Chopra announced that the CFPB will be establishing units within its enforcement division to detect corporate violations of existing court- and agency-issued orders. He also stressed that the CFPB would continue to focus on bringing enforcement actions against individuals, particularly those who have been involved with prior offenses, and called on private actors to help the CFPB identify and address potential misconduct. 

How Companies Can Prepare

Chopra’s speech underscores the importance of maintaining effective and up-to-date compliance programs that are consistent with agency regulations and orders. Companies can proactively respond to Chopra’s pronouncement by engaging in the following conduct: (1) implementing and maintaining a robust internal program that ensures compliance with consumer laws and (2) conducting prompt and thorough investigations when misconduct is alleged. For those companies that already have reached or plan to reach resolutions with the CFPB and other federal agencies, it is now more important than ever that the terms of those resolutions must be clearly defined. Vague or overbroad language in a settlement could broaden the scope of potential liability if a regulator later claims that the company failed to meet its terms.