CFPB Lawsuit Barred by U.S. Inaction, Payment Firm Says

By Chris Bruce

Aug. 9 — A payment processor sued by the Consumer Financial Protection Bureau said the CFPB waited too long to file its lawsuit, citing inaction following a probe by another agency ( Cons. FIn. Protection Bureau v. Intercept Corp., D.N.D., No. 16-cv-00144, motion to dismiss 8/8/16 ).

Intercept Corporation Aug. 8 asked a federal judge to dismiss the CFPB’s June lawsuit that said the Fargo, N.D., company engaged in unfair acts and practices by enabling clients to make unauthorized withdrawals from consumer bank accounts.

In an Aug. 8 brief, Intercept raised several grounds for dismissal, including an argument that the CFPB failed to bring the suit within the relevant three-year statute of limitations.

According to Intercept, although the Federal Trade Commission in 2012 challenged certain Intercept procedures “under an identical theory,” the government failed to take further action.

The government’s failure to press that claim, Intercept said, “precludes the Bureau’s present effort to revisit that decision long after the [statutory] limitations period has run.”

“The Bureau may disagree with the FTC’s original conclusion, but it has no right to attempt to overrule it long after the statute of limitations has expired,” Intercept said.

The suit against Intercept is one of a number of CFPB actions alleging unfair practices by payment processors.

It's being closely watched in part because the CFPB alleged that Intercept is a “covered person” and a “service provider” under the Consumer Financial Protection Act (CFPA), even though Intercept says it mainly processes payment Automated Clearing House (ACH) transactions for merchants and has “no relationship with its merchants’ consumers.”

In its Aug. 8 filing, Intercept said it's neither a “covered” person or a “service” provider as alleged by the CFPB.

Among other points, the company also said the CFPB's complaint failed to spell out the elements of an unfairness claim, and said the agency's structure violates the U.S. Constitution.

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

To contact the editor responsible for this story: Mike Ferullo at

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