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Attorneys Discuss Issues With CFPB’s CID Letters

The Civil Investigative Demand letters sent by the Consumer Financial Protection Bureau are overly broad, too demanding, and impossible to defend against, according to attorneys speaking out about the practice.

Yesterday, the agency announced a comprehensive overview of all of its policies and procedures, starting with the CID process.

The letters usually indicate the start of an investigation by the CFPB into an organization. But lawyers criticized the CIDs, bringing up three broad issues.

Former director Richard Cordray had a track record for denying appeals to subpoenas issued by the CFPB. Making matters worse, those denials were posted to the CFPB’s website, which served as a spotlight letting everyone know that an investigation was likely being conducted. Requests for confidential treatment were often made, and usually denied as well.

Companies have also accused the CFPB of being too broad and unduly burdensome in the requests made in a CID letter. Two company, one of which was represented by a former CFPB enforcement attorney, argued this to the CFPB, but were denied. One of the companies took to the CFPB to court over the issue.

The cherry on top of receiving a CID letter is that companies have to “meet and confer” with the CFPB within 10 days of receiving the letter.

“That timetable is too fast, especially when the CID includes a laundry list of requests that require detailed investigation to determine what documents are available,” said Eric Mogilnicki, a partner at Covington & Burling. “By both providing a short time for an appeal and requiring a detailed factual record to support that appeal, the bureau’s rule stacks the deck against anyone who wishes to oppose a CID.”

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