Professionals who advise consumers regarding financial matters should pay careful attention to the Consumer Financial Protection Bureau (CFPB). The CFPB’s primary mission is to monitor banks, credit unions and other consumer financial services providers. The CFPB also has broad authority to take enforcement action against professionals who advise consumers regarding federal consumer finance laws. The CFPB recently chose to exercise its first judicial enforcement action against a professional responsible for advising consumer borrowers.
Last month, the CFPB sued a California lawyer and his law firm in a case styled Consumer Financial Protection Bureau v. Chance Edward Gordon, et al., for allegedly violating the provisions of the CFPA and Regulation O by taking advantage of distressed borrowers who were facing foreclosure. According to the Complaint, the Defendants charged distressed borrowers thousands of dollars while promising to help reduce their mortgages or secure modification of their loans. The Complaint alleges that the Defendants did little or nothing to assist the distressed borrowers. In addition to injunctive relief, the CFPB seeks additional relief, including rescission, disgorgement, restitution and compensation for unjust enrichment.
The Gordon case is notable for a number of reasons. First, it demonstrates the willingness of the CFPB to take action against entities other than just banks and financial institutions. Second, it demonstrates that the CFPB is not going to limit its enforcement activities to large high profile entities. Third, it means that professionals who provide advice to consumers regarding their financial matters must now recognize that there’s a new Sheriff in town.