CFPB Brief Rejects Time Limits on Administrative UDAAP Claims

By Chris Bruce

Jan. 21 — A freshly filed brief by the Consumer Financial Protection Bureau (CFPB) says a Dodd-Frank Act statute of limitations on claims of unfair, deceptive, or abusive acts or practices (UDAAP) applies only in court, and not to claims brought in an administrative forum.

The brief, made public Jan. 21, marks the latest turn in an administrative enforcement action against Integrity Advance LLC, a Newark, Del.-based company that used to offer online consumer loans but no longer does so, and its chief executive, James R. Carnes.

The CFPB's stance signals that CFPB-supervised companies may have more exposure to hard-to-fight UDAAP claims. In a separate and ongoing case, the CFPB has already said the three-year statute of limitations in the Real Estate Settlement Procedures Act (RESPA) does not apply to RESPA claims brought administratively.

But the CFPB's new brief means the agency is taking the same position with respect to UDAAP claims in administrative actions.

That heightens the legal risks for alleged wrongdoers while potentially giving the consumer watchdog more options when it considers enforcement action.

CFPB Alleges Wrongs

The case dates from November, when the CFPB alleged that Integrity Advance and Carnes “systematically misled consumers regarding the terms of its loans, wrongfully required electronic access to consumer bank accounts, and unfairly undermined consumers’ ability to contest withdrawals from their accounts” (223 BBD, 11/19/15).

Integrity Advance Dec. 21 asked the administrative law judge to dismiss the action, saying among other points in an accompanying brief that the CFPB's claims are barred by a three-year statute of limitations under Dodd-Frank.

The CFPB disagreed Jan. 21, saying Dodd-Frank's time limits only apply to civil litigation. “Respondents’ statute of limitations arguments all suffer from the same fundamental flaw,” the brief said. “They rely on provisions that only apply to civil actions in court, not to administrative proceedings like this one.”

The CFPB, which also alleged violations under the Truth in Lending Act (TILA) and the Electronic Fund Transfer Act (EFTA), said their statutes of limitation similarly do not apply in administrative actions.

Cases Highlight Enforcement

The CFPB's position on the statute of limitations issue — particularly with respect to the UDAAP claims — follows a critical stance the CFPB has taken in a separate enforcement action against PHH Corp. under RESPA (PHH Corp. v. Consumer Fin. Protection Bureau, D.C. Cir., No. 15-cv-01177, argument scheduled, 1/15/16). (12 BBD, 1/20/16).

That case is now on appeal in the U.S. Court of Appeals for the District of Columbia Circuit, which has scheduled argument for April 12 (12 BBD, 1/20/16).

In the PHH case, an administrative law judge (ALJ) and Cordray held the agency's administrative claims against PHH are not subject to RESPA's three-year statute of limitations.

Lucy Morris, a partner with Hudson Cook in Washington, D.C., and formerly the CFPB's deputy enforcement director for litigation, Jan. 21 said the CFPB's brief in the Integrity Advance case tracks the argument in the PHH case, but also extends the argument to UDAAP administrative claims.

“They're saying here that there's no statute of limitations for UDAAP claims in administrative actions,” said Morris, who represents PHH. “As in PHH and here, too, they really don't have a good answer for why Congress would provide the same remedies in two forums but provide very different limitations periods.”

One Step Back?

Among other points, she said the CFPB's brief reveals a potentially important concession on a separate question. Integrity Advance argued that the CFPB impermissibly alleged UDAAP claims on actions that occurred prior to July 21, 2011 — the so-called transfer date or “live date” date when an array of consumer financial protection laws transferred from the authority of the prudential bank regulators to the CFPB.

In its brief, the CFPB said it disagrees with that argument, but said there is no need to address it, because certain claims in this case are limited to actions that occurred on or after July 21, 2011.

According to Morris, that's an implicit concession by the CFPB that UDAAP claims based on conduct before the live date may be impermissible. But it might not last, she added.

“They're conceding it so they don't have to litigate it,” she said. “They're clarifying that they don't have to address it in this particular case, but that allows them to preserve that argument for another case in the future,” Morris told Bloomberg BNA.

Cordray's Authority Questioned

Integrity Advance is represented by Allyson B. Baker, Peter S. Frechette, Hillary S. Profita, and Joanna Breslow Boyd of Venable LLP in Washington, D.C.

Among other points in their Dec. 21 brief, they said the CFPB may not take enforcement action for certain violations that took place before CFPB Director Richard Cordray's Senate confirmation.

“Thus, before there was a lawfully-appointed Bureau Director, the agency did not have the authority to pursue enforcement actions against entities that were not previously within the jurisdiction of a federal banking regulator,” the Integrity Advance brief said.

In its 26-page response Jan. 21, the CFPB said that argument and others by Integrity Advance are “wholly irrelevant,” arguing the CFPB's authority was uncontested at the time it moved against Integrity Advance in November.

“When the Bureau initiated this proceeding by filing the Notice of Charges, the Bureau had a confirmed Director and was vested with the full powers granted to it by Congress — facts which even Respondents admit,” the CFPB's brief said.

To contact the reporter on this story: Chris Bruce in Washington at

To contact the editor responsible for this story: Seth Stern at

For More Information 
The CFPB's brief is at
The Integrity Advance brief on its motion to dismiss is at