The Consumer Financial Protection Bureau ("CFPB") modified its policies concerning civil investigative demands ("CIDs"). The updated policy requires that CIDs provide more information about "potentially wrongful conduct under investigation" and applicable law that may have been violated. Going forward, CIDs will also specify the business activities that are subject to the CFPB's authority.
The new policy takes into consideration recent court rulings relating to "notifications of purpose" and is consistent with comments that the CFPB received on several aspects of its operations.
Commentary / Kyle DeYoung
The CFPB's announcement is welcome news. Complying with the CID process can be costly and time consuming. Vague and ambiguous requests from the CFPB have been the subject of successful challenges in litigation and many complaints by companies on the receiving end of CIDs. The policy change will make fishing expeditions less likely and hopefully will reduce the burden and cost of complying with the CID process in many cases.
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