[Federal Register Volume 85, Number 63 (Wednesday, April 1, 2020)]
[Notices]
[Pages 18214-18217]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06749]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
[Docket No. CFPB-2020-0013]
Request For Information To Assist the Taskforce on Federal
Consumer Financial Law
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Notice and request for information.
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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
seeking comments and information from interested parties to assist the
Taskforce on Federal Consumer Financial Law (Taskforce). The Taskforce
is an independent body within the Bureau and reports to the Bureau's
Director. The Taskforce is charged with developing recommendations on
harmonizing, modernizing, and updating the Federal consumer financial
laws, as well as identifying gaps in knowledge that should be addressed
through research, ways to improve consumer understanding of markets and
products, and potential conflicts or inconsistencies in existing
regulations and guidance.
DATES: Comments must be received by June 1, 2020.
ADDRESSES: You may submit responsive information and other comments,
identified by Docket No. CFPB-2020-0013, by any of the following
methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Email: [email protected]. Include Docket No.
CFPB-2020-0013 in the subject line of the message.
Hand Delivery/Courier/Mail: Comment Intake, Bureau of
Consumer Financial Protection, 1700 G Street NW, Washington, DC 20552.
Instructions: The Bureau encourages the early submission of
comments. All submissions must include the document title and docket
number. Please note the number of the question on which you are
commenting at the top of each response (you do not need to answer all
questions). Because paper mail in the Washington, DC area and at the
Bureau is subject to delay, commenters are encouraged to submit
comments electronically. In general, all comments received will be
posted without change to http://www.regulations.gov. In addition,
comments will be available for public inspection and copying at 1700 G
St. NW, Washington, DC 20552, on official business days between the
hours of 10 a.m. and 5 p.m. eastern standard time. You can make an
appointment to inspect the documents by telephoning 202-435-7275.
All submissions in response to this request for information,
including attachments and other supporting materials, will become part
of the public record and subject to public disclosure. Sensitive
personal information, such as account numbers or Social Security
numbers, or names of other individuals, should not be included.
Submissions will not be edited to remove any identifying or contact
information.
FOR FURTHER INFORMATION CONTACT: Nat Weber, Chief of Staff, or Matt
Cameron, Staff Director, Taskforce on Federal Consumer Financial Law,
at 202-435-7700. If you require this document in an alternative
electronic format, please contact [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
The Director of the Bureau established the Taskforce pursuant to
the executive and administrative powers conferred on the Bureau by
sections 1013(a) and 1021(c) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act). The Taskforce is charged with
(1) examining the existing legal and regulatory environment facing
consumers and providers of consumer financial products and services;
and (2) reporting its recommendations for ways to improve and
strengthen Federal consumer financial laws, including recommendations
for resolving conflicting requirements or inconsistencies, reducing
unwarranted regulatory burdens in light of market or technological
developments, improving consumer understanding of markets and products
and services, and identifying gaps in knowledge that the Bureau should
address through future research. Where possible and within time
constraints, the Taskforce's report may include recommendations
relating to the 18 enumerated consumer laws and titles X and XIV of the
Dodd-Frank Act, including those provisions relating to unfair,
deceptive, or abusive acts or practices. The Taskforce's
recommendations may include actions that the Bureau could carry out
using its current authorities and actions that would require
legislation to implement.
The Taskforce is inspired in part by an earlier commission
established in 1968 by the Consumer Credit Protection Act (Act). In
addition to various changes to consumer law generally, the Act
established a national commission to conduct original research and
provide Congress with recommendations relating to the regulation of
consumer
[[Page 18215]]
credit. The commission's report contained original empirical data,
information, and analyses--all of which undergird the report's final
recommendations. The data, findings, and recommendations from the
commission were all made public and the report led to significant
legislative and regulatory developments in consumer finance.
II. Requests for Information
The Taskforce is considering what recommendations might promote the
welfare of consumers in connection with the market for consumer
financial products and services. The Taskforce seeks input from the
public at this time to help identify areas of consumer protection on
which it should focus its research and analysis during the balance of
its one-year appointment. This Request for Information will be one of
multiple opportunities for the public to provide feedback directly to
the Taskforce and thus to help inform its recommendations.
Congress created the Bureau to ensure that ``all consumers have
access to markets for consumer financial products and services and that
markets for consumer financial products and services are fair,
transparent, and competitive.'' \1\ In general, consumers benefit from
markets characterized by robust competition, which can offer attractive
choices and fair prices. In addition, the terms of the services must be
clear, so that consumers can make informed choices, and must be free of
unfair, deceptive, and abusive acts and practices.
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\1\ 12 U.S.C. 5511(a).
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The Taskforce is seeking information from interested parties on
which areas of the consumer financial services markets are functioning
well--that is, which areas are fair, transparent, and competitive--and
which might benefit from regulatory changes that could facilitate
competition and materially increase consumer welfare. To that end, this
Request for Information asks a series of questions about the market for
consumer financial products and services, with a special interest in
the below markets (though respondents should feel free to suggest
others):
Automobile financing (credit or lease)
Credit cards
Credit repair
Consumer reporting
Debt collection by third parties (collection agencies)
Debt collection by creditors (in-house collections)
Debt settlement
Deposit accounts (checking or savings)
Electronic payments
Money transfers
Mortgage origination and servicing
Prepaid cards
Small-dollar loans (installment, payday, vehicle title
loans)
Student loans and student loan servicing
As articulated more specifically in the questions below, the
Taskforce is interested in information about how well financial markets
are functioning for consumers. Efficient markets offer consumers a wide
selection of products and services that meet their financial needs at
competitive prices. Consumers can capture those benefits when they have
truthful information about the prices and features of the products and
services they seek. By contrast, markets that perform poorly are less
likely to deliver products and services or offer them at prices
commensurate with cost, risk, and other relevant considerations.
Unfair, deceptive, and abusive acts and practices deprive consumers of
the benefits that transparent and efficient markets can deliver. The
Bureau, through its enforcement of laws and regulations prohibiting
such behavior, strives to rid markets of these impediments. It is
important, therefore, that the policies, laws, and rules effectively
target the problems they are intended to address.
Every statutory or regulatory change creates at least some cost--
and often considerable cost--as both consumers and industry adjust to
new rules and bear the cost of change. For that reason, the Taskforce
is most interested in learning where changes would be most worth the
cost. In other words, the Taskforce hopes to hear from interested
parties about the markets or services where a change in the rules would
provide the greatest marginal benefits relative to the marginal
costs.\2\
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\2\ To the extent that a commenter's response to any of the
questions below overlaps with its responses to the Bureau's Call for
Evidence, the commenter may wish to incorporate by reference or
elaborate on its prior submissions. See Bureau of Consumer Fin.
Prot., Call for Evidence (Apr. 17, 2018), https://www.consumerfinance.gov/policy-compliance/notice-opportunities-comment/archive-closed/call-for-evidence/.
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A. Expanding Access
These questions explore potential obstacles to financial inclusion.
1. Millions of U.S. households lack a bank account.\3\ Should the
Bureau promote greater access to banking services and, if so, how? Are
alternatives to deposit accounts, such as prepaid cards and peer-to-
peer electronic payments, sufficient when compared to traditional
banking products? What is the evidence regarding consumers'
understanding of, and experience and satisfaction with, these products?
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\3\ Bd. of Governors of the Fed. Reserve Sys., Report on the
Economic Well-Being of U.S. Households in 2018-May 2019 (June 5,
2019), https://www.federalreserve.gov/publications/2019-economic-well-being-of-us-households-in-2018-banking-and-credit.htm.
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2. One important reason for access to a bank account is to
facilitate transactions. To what extent is it necessary to tie
transaction services to the banking system? To what extent could
transaction services and the banking system exist independently, and
would independent existence raise new consumer protection risks that
regulators should consider? Would reducing clearance times impact the
demand for alternative products, such as check cashing, small-dollar
loans, and overdraft protection? If so, to what extent?
3. What steps could be taken to promote greater competition among
providers of services such as payments, financial advisory services,
and savings accounts? How do third-party applications, sometimes
referred to as ``open banking,'' affect the competition? To what extent
do third-party applications raise new consumer protection risks that
regulators should consider?
4. There is consumer demand for short-term, small-dollar credit.
What impediments exist for expanding access to short-term, small-dollar
loans and ensuring that this market is fair, transparent, and
competitive? What has been the impact of State and Federal efforts to
regulate such credit? Is the annual percentage rate a meaningful
measure for a very short-term loan? If not, what other measures might
be more useful to help consumers in understanding and assessing the
cost of short-term credit?
5. Some creditors are supplementing or replacing traditional
methods of underwriting (which often use income, debts, credit history,
and stability factors) by employing ``alternative data.'' Some types of
alternative data clearly expand the sources of financial information,
such as payment histories for rent, utilities, and other consumer
obligations, and other types of alternative data appear to have little
in common with traditional underwriting information. What role should
the Bureau play in regulating the furnishing, reporting, and use of
alternative data, and what should the Bureau consider in developing
policy in this area? How should the Bureau consider alternative factors
which
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creditors find helpful in predicting risk, but which may lack an
obvious relationship with creditworthiness or have differential impacts
on some consumers or groups of consumers?
6. Should the Bureau clarify its position on disparate impact
theory under the Equal Credit Opportunity Act? If so, what should be
the Bureau's position?
B. Consumer Data
These questions explore current and future-looking topics regarding
the protection and use of consumer data.
7. Both the Fair Credit Reporting Act (FCRA) and its implementing
Regulation V and the Gramm-Leach-Bliley Act and its implementing
Regulation P contain important protections of consumers' personal
information. Are these protections sufficient? Why or why not? If not
sufficient, what further protections should the Bureau or Congress
consider? Are there obligations in these regulations or statutes that
impose a burden not justified by the corresponding consumer benefit?
8. The FCRA requires consumer reporting agencies to ``follow
reasonable procedures to assure the maximum possible accuracy'';
requires these agencies to disclose to a consumer the contents of the
consumer's file; contains procedures for consumers to dispute the
accuracy of information in these agencies' files; and requires
notifications when information from these agencies' files has
contributed to a user's adverse action. In addition, the FCRA's
implementing Regulation V requires that data furnishers implement and
maintain reasonable written policies and procedures concerning the
accuracy of the data they furnish. Are these provisions designed to
ensure accuracy sufficient? Why or why not? If not, what further
protections should the Bureau or Congress consider? Are there
obligations in these laws that impose a burden not justified by the
commensurate consumer benefit?
9. Most States have enacted laws that afford consumers certain
protections in the event of a data breach. There is considerable
variation among these laws, including the triggering events for
coverage by the law and the requirements and remedies relating to a
breach. Would Federal legislation, regulation, or guidance addressing
data breaches be desirable? Why or why not? Would it be desirable to
have a uniform national standard for data breach obligations? Why or
why not?
10. Financial technology, or FinTech, companies often use consumer
data to provide new or enhanced financial products and services, but
this can raise concerns about consumers' ability to protect privacy and
control the use of their data. With respect to consumer data, how best
can the Bureau or Congress balance between facilitating FinTech
innovations that increase consumer choice and ensuring consumer
protection? Do any existing technologies or practices, such as zero-
knowledge proofs, raise fewer consumer protection concerns or have the
potential to help regulators resolve the balance between consumer
choice and consumer protection?
C. The Regulations
These questions focus on the regulations the Bureau writes and
enforces. Commenters are encouraged to include specific examples in
their responses.
11. Are there gaps in consumer financial protections that should be
filled by strengthening the Bureau's regulations? What type of
protections are needed (e.g., additional disclosures, substantive
requirements)? How should the costs and benefits of the proposed
changes be evaluated?
12. Uncertainty can increase compliance costs and litigation risk
without benefitting consumers. Are there areas of significant ambiguity
or inconsistency in the regulations? Where would regulations benefit
significantly from increased clarity or harmonization--both with
respect to the Bureau's regulations and with respect to overlap,
duplication, or inconsistency with regulations issued by other Federal
agencies? Please explain the lack of clarity and how the regulations
should be clarified.
13. Where have regulations failed to keep up with rapid changes in
consumer financial services markets? Are regulatory changes needed to
address new products and services and the way consumers obtain them?
Are there regulations that have outlived their usefulness? Are there
new regulations that might be needed? Are there regulatory areas or
specific regulations now sufficiently so overlapping as to be
redundant?
14. Some stakeholders favor regulations with specific requirements,
which draw bright lines for a company's compliance obligations but can
apply a one-size-fit-all approach. Others favor ``principle-based''
regulations, which can provide a company with flexibility but can
create compliance uncertainty. Federal regulations currently employ
both approaches (e.g., Regulation Z's highly specific disclosure rules,
and Regulation V's requirement that data furnishers implement and
maintain reasonable written policies and procedures concerning the
accuracy of the data they furnish). Which approach is preferable, and
does this depend on the industry, the statute, or other considerations?
Please explain.
D. Federal and State Coordination
The Bureau is one of many Federal agencies with supervision or
enforcement responsibilities with respect to financial institutions.
Having more than one agency can increase the resources devoted to
supervision and enforcement, but it can also increase the burden on the
company (and costs to its customers) and may result in conflicting
positions among governmental agencies. These questions focus on the
costs and benefits of this overlap.
15. With respect to institutions and laws currently within the
Bureau's jurisdiction, the Bureau's supervision or enforcement
authority may be exclusive or shared with other regulators, depending
on the institution or law in question. Have the agencies been
cooperating appropriately in areas of shared jurisdiction, and are
there ways in which their cooperation could be improved? Is more
clarity needed about how the agencies are cooperating in areas of
shared jurisdiction? Do the Bureau and other agencies act jointly in
appropriate circumstances?
16. Are changes to the shared-jurisdiction framework desirable
(e.g., by legislation)? In what way? For instance, would it be
beneficial to assign to one agency sole (or primary) responsibility for
supervising or enforcing some or all the consumer financial protection
laws? Would having a single source of authority enhance or detract from
competition and consumer welfare? What are the costs and benefits of
overlapping enforcement jurisdiction for nonbank creditors?
17. State financial regulators typically examine a financial
institution's compliance with State law, but they can also bring cases
under certain Federal consumer financial protection laws. For example,
a State may initiate its own action to enforce the Dodd-Frank Act and
certain enumerated consumer laws. In addition, once the Bureau has
decided to bring an enforcement action, the Bureau may invite States to
join in the action. What are the costs and benefits to consumers and
financial institutions of overlapping enforcement powers?
18. Given the jurisdictional overlap between State and Federal
regulators on consumer financial markets, are there quantifiable
examples of whether this overlap has led to disproportionate compliance
costs for small financial
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institutions, such as community banks or credit unions?
E. Improving Consumer Protection
These questions address overall performance of consumer protection.
19. Which markets for consumer financial products or services are
functioning well--that is, which markets are fair, transparent, and
competitive? Which markets might benefit from regulatory changes that
could facilitate competition and materially increase consumer welfare?
20. What types of disclosures regarding consumer financial products
or services are effective and what types are not? Could the content,
timing, or other aspects of disclosures be improved and, if so, how?
21. How should the Bureau determine an appropriate remedy for a law
violation, considering the need to correct and deter violations without
creating adverse effects on competition and other unintended
consequences?
22. What is the optimal mix of regulation, enforcement,
supervision, and consumer financial education for achieving the
Bureau's consumer protection goals?
23. How can we best assess the efficacy of the Federal consumer
financial protections in achieving their goals?
Dated: March 27, 2020.
Kathleen L. Kraninger,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2020-06749 Filed 3-31-20; 8:45 am]
BILLING CODE 4810-AM-P