The Consumer Financial Protection Bureau has filed an amicus brief in the 10th Circuit U.S. Court of Appeals in Denver, Colo., arguing that certain borrowers who did not receive important disclosures mandated by the Truth in Lending Act may cancel their loans so long as they notify the lender of their intent to cancel within three years.
TILA specifies that consumers can cancel a loan under this provision by notifying their lenders of their cancellation within three years of signing their loan documents. The question raised by the case, Rosenfield v. HSBC Bank, USA, is whether borrowers also must file a lawsuit against their lenders within three years.
In its “friend of the court” brief, the CFPB takes the position that a consumer does not need to do so.
In a CFPB press release, the Bureau says it “is committed to filing amicus briefs in litigation involving the federal consumer financial protection laws that it oversees and in which the CFPB determines its views will assist the courts in correctly resolving the matters.”
The CFPB has two valid reasons for filing amicus briefs, said Beau Hurtig, a shareholder practicing in Fredrikson & Byron’s Bank & Finance, Corporate and Privacy Groups.
“The CFPB would probably argue that it’s their purpose – they’re trying to ensure consistency and that things are interpreted correctly,” Hurtig said. “Another very strong purpose that I’ve seen over and over is just the notion of empowering customers.”
But do amicus briefs carry any weight in court?
The briefs “can have significance, especially where they provide a big picture point of view or a neutral point of view that’s not expressed by the individual parties. They’re most valuable if they bring a new perspective or bring up unintended consequences,” Hurtig explained.
“On the other hand, these briefs are less relevant where the court sees the filing party has a bias or echoes the position of one side or another. That’s often the case, and courts are often sophisticated enough that they can assign proper weight to those types of briefs,” Hurtig said.
The Bureau explains, “Amicus briefs are an important way for the CFPB to ensure that the statutes it oversees are correctly and consistently interpreted by the courts, even in cases in which the CFPB is not itself a named party.”
Other regulatory agencies – for example, the Federal Trade Commission – have also been known to file amicus briefs.
But Hurtig wonders whether the legal resources allocated to researching and writing amicus briefs might be better spent elsewhere.
“Maybe those resources would be better allocated to enforcing the laws after they’re passed by Congress and interpreted by the courts,” he said.