On January 20, 2017, the Ninth Circuit affirmed a trial court ruling that ordered three tribal lending entities to comply with the Consumer Financial Protection Bureau’s (CFPB) civil investigative demands.
The CFPB’s investigation concerns whether small-dollar online lenders or similar persons had engaged in illegal advertising, marketing, or collection practices in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Truth in Lending Act, the Electronic Funds Transfer Act, the Gramm-Leach Bliley Act, and other consumer protection laws. During the course of the investigation, it served several investigative demands on the three tribal lending entities, to which the entities’ affiliated tribes directed them not to respond on grounds of tribal sovereign immunity.
When the CFPB refused to set aside its demands, it sought an order from the U.S. District Court for the Central District of California compelling a response, which the court granted. The tribal lending entities appealed the district court determination. The entities argued on appeal that because they were created and operated by recognized Native American tribes, the CFPB’s enforcement authority did not extend to them. However, the Ninth Circuit affirmed the district court’s order compelling a response. The court explained that the Consumer Financial Protection Act (CFPA) was a generally applicable law that had authorized the creation of the CFPB and that generally applicable laws do, in fact, apply to Native American tribes unless Congress expressly excluded the tribes from the law’s purview. Because Congress did not explicitly do so, the Ninth Circuit was not persuaded that the CFPB’s authority to issue investigative demands was “plainly lacking.”
Enforcement Watch will continue to monitor and report on any new developments in the CFPB’s investigation.