The Consumer Financial Protection Bureau has amassed more than $300 million in its consumer relief fund, according to a budget report issued by the Bureau in February. That figure is a 94 percent jump from the previous year, and was driven by a large increase in consent orders settled by the CFPB during the past year. The combination of increasing enforcement with unspent relief funds has some in the industry questioning the bureau.
The Dodd-Frank Act gave the CFPB the authority to collect and retain civil penalties from regulated entities in judicial or administrative actions. The bureau collected $183.1 million in civil penalties in fiscal 2015 from a variety of companies that settled allegations of wrongdoing, a 136 percent jump from a year earlier. The agency settled 37 cases in fiscal 2015, compared with 22 in fiscal 2014, a 68 percent increase. The agency held $305.6 million in what is known as “unobligated balances” in its civil penalty fund at the start of fiscal 2016. According to an article in the American Banker nespaper, the CFPB’s civil penalty fund does not include roughly $6 billion in consumer relief, including $1 billion in restitution, that companies paid to redress consumer harm in 2015.
The sheer size of the fund is stoking concerns that the CFPB is collecting more money than necessary from firms it pursues. “It begs the question of why they are collecting this money from the industry if they aren’t able to use it in order to remediate allegedly harmed consumers or conduct education programs,” said a former CFPB attorney commenting on the report. “It further suggests that perhaps they are over-estimating the harm to consumers in their enforcement actions.”
A CFPB spokesman said the current size of the fund is a reflection of the length of time it takes between collecting penalties and reimbursing consumers. Determining which consumers get paid and at what amounts can involve painstaking forensic work, said the spokesman. He also noted that since the report was issued, the CFPB has allocated $108 million from the civil penalty fund to be paid to those harmed consumers this year, which will significantly draw down the unobligated balances of the fund.
But some industry observers said the CFPB’s reports on how money is being distributed are confusing and don’t allow outsiders to check up on how it’s being spent. The CFPB publishes details of payouts by the fund, including the number of consumers who receive checks, the percentage of checks that get cashed and the total dollar amount allocated and distributed. It does not publish the names of individual consumers.