The Consumer Financial Protection Bureau has denied a petition from a regional payday lending company that sought to set aside a Civil Investigative Demand, ruling that its request was not overly broad and does not impose an undue burden, while also claiming the company failed to “meaningfully engage” in the meet-and-confer process because it was not negotiating in good faith.
In its petition, the company attempted to convince the CFPB that is a small business “that is barely getting by.” The number of stores operated by the company is decreasing and the company’s chief executive also serves as its chief compliance officer. The number of employees at the company has shrunk to 103 at the end of 2022, which is about half as many as the company employed five years ago. It has spent more than $82,000 complying with the CID so far, which represents 45% of its net income from 2022.
The company did not negotiate in good faith, the CFPB ruled, because it refused to propose modifications to the CID and only asked for its complete withdrawal. When the Office of Enforcement attempted to discuss ways to minimize the burden of the CFPB, that company said it “would not engage in any detailed discussion about any specific request in the CID,” the CFPB wrote in its ruling. “Simply insisting that a CID be entirely withdrawn does not amount to “meaningful engage[ment]” in the type of good-faith negotiation that is necessary for a meet-and-confer to be productive. This refusal to meaningfully engage in the meet-and-confer process would be reason alone to deny the petition.”
On top of that, the CFPB ruled the CID was not overly broad and that the company did not establish that the CID imposed an undue burden, the Bureau ruled. The company failed to provide specifics detailing why the CID was overly burdensome, CFPB Director Rohit Chopra said in his ruling. “… if Pacific Rim truly believes that the cost of compliance poses an existential threat to its business operations, it is unclear why the company has refused to engage in the good-faith negotiation that could substantially reduce its compliance burden,” he wrote.