Responding to a CFPB Civil Investigative Demand (CID)

Experienced Federal Defense Counsel for Responding to Civil Investigative Demands (CIDs) from the Consumer Financial Protection Bureau (CFPB)

The Consumer Financial Protection Bureau (CFPB) is the federal agency tasked with overseeing the consumer finance market and enforcing compliance with the laws that protect consumers against predatory lending and other fraudulent and unlawful practices. As the CFPB explains, “We have supervisory authority over banks, thrifts, and credit unions with assets over $10 billion, as well as . . . nonbank mortgage originators and servicers, payday lenders, and private student lenders of all sizes.” To satisfy its enforcement mandate, the CFPB investigates lenders through various means, including the issuance of civil investigative demands (CIDs).

Not all federal agencies have the authority to issue CIDs. In fact, the list of federal agencies with this authority is fairly short. However, the CFPB’s authority to issue civil investigative demands is notable not only for its uniqueness, but also for its implications for lenders facing CFPB scrutiny.

Former Federal Government Attorneys Experienced in CFPB Civil Investigative Demand Defense

At Oberheiden P.C., we bring relevant experience to defending companies during CFPB investigations. In addition to experience as federal defense counsel for lenders and other businesses across the country, this includes experience as U.S. Attorneys and Assistant U.S. Attorneys representing the federal government in civil and criminal cases. With insights gained from handling CIDs from both sides, we provide our clients highly strategic advice, and we are able to effectively communicate with the CFPB on behalf of our clients. This includes not only addressing matters related to our clients’ civil investigative demands, but also working with CFPB agents to steer our clients’ investigations forward favorable resolutions.

Responding to a civil investigative demand from the CFPB is a time-consuming and resource-intensive process. Lenders that have received CIDs need to have a clear understanding not only of the scope of their burden, but also of the risks of non-compliance. Failure to disclose responsive records to the CFPB can have various adverse consequences even if it is unintentional, and the CFPB can assess lenders’ compliance with their CIDs through various means.

Put our highly experienced team on your side

Dr. Nick Oberheiden

Founder

Attorney-at-Law

Lynette S. Byrd

Former Department of Justice

Brian J. Kuester

Former U.S. Attorney
Former DA

John W. Sellers

Former Senior Trial Attorney
U.S. Department of Justice

Local Counsel

Joanne Fine DeLena

Former Assistant U.S. Attorney

Local Counsel

Joe Brown

Former U.S. Attorney & Former District Attorney

Local Trial & Defense Counsel

Amanda Marshall

Former U.S. Attorney

Local Counsel

Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Roger Bach

Former Special Agent (OIG)

Michael Koslow

Former Supervisory Special Agent (FBI)

Chris Quick

Former Special Agent (FBI & IRS-CI)

Ray Yuen

Former Supervisory Special Agent (FBI)

The Five Phases of CFPB Civil Investigative Demand Response

Despite the breadth of most CFPB civil investigative demands, CID recipients have relatively little time to formulate their responses. There are several steps CID recipients should take right away, and there are steps recipients will need to take within either 10 or 20 days of the demand’s issuance. But, ultimately, resolving the CFPB’s inquiry could take months—if not longer—depending on the circumstances involved.

1. Immediate Response to the CFPB’s Civil Investigative Demand

Upon receiving a civil investigative demand from the CFPB, efforts to prepare the company’s response (and assert a strategic defense, if necessary) should begin immediately. As a preliminary matter, lenders served with CIDs should implement legal holds in order to ensure the preservation of all relevant hardcopy and electronic files. Preserving electronically stored information (ESI) is becoming increasingly challenging as lenders transition to digital signatures and remote file management, and as employees often have multiple devices (potentially including personal devices) with emails, messages, and files that may be subject to disclosure.

Another critical early step is to evaluate the scope of the CID. Is the company capable of submitting a compliant response by the stipulated deadline? If not, this is an issue the company must address up front—not when it is about to run out of time. If the CID is unreasonably broad, requests files that are not in the company’s custody, or otherwise presents insurmountable challenges, these are issues the company will need to address up front with the CFPB as well.

2. Within 10 Days of Receiving a CFPB Civil Investigative Demand

Within 10 days of receiving a civil investigative demand from the CFPB, the recipient must make arrangements to “meet and confer” with CFPB agents regarding any issues. During this process, both the company and the CFPB have an obligation “to discuss and attempt to resolve all issues regarding compliance with the civil investigative demand.” However, the CFPB’s regulations also state that deadline extensions are “disfavored,” and this means that CID recipients must be able to present compelling arguments as to why an additional grace period is warranted.

In addition to raising any concerns regarding the CFPB’s deadline, CID recipients must raise all other concerns during the meet and confer process as well. At subsequent stages, the CFPB “will consider only issues raised during the meet and confer process,” and it will only do so if the recipient has “meaningfully engaged” in efforts to achieve a mutually agreeable resolution. This means that prior to meeting and conferring with the CFPB, lenders must work with their counsel to assess not only the practical challenges their CIDs present, but also any legal issues they may need to preserve for future proceedings.

3. Within 20 Days of Receiving a CFPB Civil Investigative Demand

Regardless of when the “meet and confer” process takes place, CFPB CID recipients have 20 days from the date of service to file a petition to modify or set aside the demand. Recipients must file their petitions with the CFPB, and their petitions must “set forth all factual and legal objections to the civil investigative demand, including all appropriate arguments, affidavits, and other supporting documentation.”

Filing a petition to modify or set aside a CID delays (or “stays”) the response deadline; however, this does not mean that lenders can simply ignore their CIDs during this interim period. The CFPB is extremely unlikely to set aside a CID in its entirety, so recipients must continue their efforts to ensure that they will be prepared to submit a compliant response—whatever that may ultimately entail.

4. Compiling Responsive Records and Preparing Written Answers and Oral Testimony

When compiling responsive records, CFPB CID recipients must be careful to ensure that their responses are comprehensive. With regard to ESI, recipients must also ensure that they deliver their files in compliance with the CFPB’s requirements. Equally important, if not more so, recipients must also ensure that (i) they are not disclosing any records they are entitled to withhold, and (ii) they are appropriately redacting hardcopy and electronic files to preserve the attorney-client privilege.

In addition to requesting voluminous records, the CFPB will often also request written answers, oral testimony, or both. Drafting written answers and preparing company representatives’ testimony is also a time-consuming process that has strategic elements as well. When representing CFPB CID recipients, we work closely with our clients’ executives and in-house attorneys to craft appropriate responses and ensure that the company’s representatives are fully prepared to speak with CFPB agents on the company’s behalf.

5. Resolving the CFPB’s Investigation

For lenders that are facing CFPB scrutiny, responding to a CID is just one step of many toward avoiding civil—or possibly even criminal—penalties. Targeted lenders should prepare their CID responses with their broader defense strategies in mind, and with an eye toward resolving the CFPB’s investigation as quickly and favorably as possible. In some cases, showing the CFPB that your company has nothing to hide will be enough. In others, companies will need to continue working with their outside defense counsel to avoid charges that could lead to negative publicity, substantial fines, and other penalties.

With this in mind, lenders cannot address civil investigative demands from the CID in a vacuum. Instead, they need to maintain a broader perspective—even as they work to meet the tight deadlines at hand. With our attorneys’ experience on both sides of federal investigations, we are able to help our clients see the full picture, accurately assess their risks, and make informed and forward-thinking decisions based on the circumstances presented.

FAQs: Responding to a Civil Investigative Demand from the CFPB

Contact Oberheiden P.C. for a Complimentary Consultation

If your company needs outside defense counsel to respond to a CFPB civil investigative demand, we encourage you to contact us promptly. Please call 888-680-1745 or inquire online to arrange a complimentary consultation.