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April 27, 2016

Federal Court Reins in CFPB’s Enforcement Authority

At the same time the D.C. Circuit is considering the constitutionality of the Consumer Financial Protection Bureau’s (CFPB) structure, the court last week ruled the CFPB “did not have authority to issue a Civil Investigation Demand (CID) to the Accrediting Council for Independent Colleges and Schools (ACICS).” 

The CFPB’s CID was intended to investigate whether ACICS, the accreditor of for-profit colleges, “has or is violating federal consumer protection laws in connection with accrediting for-profit colleges.”

“The Court found that the CFPB did not have authority to issue a CID in an investigation aimed at business practices that did not involve a consumer financial product or service,” writes Anthony DiResta at InsideARM. “This is the first time a court specifically limited the CFPB’s reach and ruled that the CFPB did not have jurisdiction to investigate a certain business practice.”

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