D.C. Circuit Affirms Denial of the CFPB’s Investigation of a College Accrediting Organization

CFPB

On April 21, 2017, the United States Court of Appeals for the District of Columbia Circuit affirmed the lower court’s decision denying the Consumer Financial Protection Bureau’s (CFPB) petition to investigate a college accreditation ​organization.  The Court limited its holding to the particular Civil Investigative Demand (CID), finding that the Notification of Purpose within the CID did not adequately describe the unlawful acts and practices the CFPB intended to investigate.  By affirming on the narrow issue, the Court avoided deciding whether the CFPB has authority to investigate the accreditation process.

The question of authority arose in August 2015, when the CFPB issued a CID to the accreditor “to determine whether any entity or person has engaged or is engaging in unlawful acts and practices in connection with accrediting for-profit colleges, in violation of . . . consumer financial protection law.”  The accreditor, which did not provide any lending or financial advisory services, challenged the CFPB’s statutory authority to investigation the accreditation process.  In April 2016, the United States District Court for the District of Columbia agreed with the accreditor and denied the CFPB’s petition.

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