by Jeff Sovern
Last month, the Department of Justice issued a policy that as DOJ describes it in its announcement of the policy, "prohibits the Department of Justice from using its civil enforcement authority to convert agency guidance documents into binding rules." Times coverage is here. What implications does this have for consumer law?
Strictly speaking, as most federal consumer protection agencies, like the CFPB and FTC, bring actions themselves rather than going through DOJ, the policy doesn't apply directly to them. But we can certainly expect the no-longer-independent CFPB to adhere to the policy voluntarily. CFPB guidance documents can be found here. It seems likely that the new FTC nominees will be asked about their views of the policy during confirmation hearings.
One of my initial thoughts is that the policy may give the Mulvaney-led CFPB an excuse not to enforce the law as laid out in CFPB guidance. But if you were counseling a client, would you advise it to ignore agency guidance? What if another administration wins in 2020 and gets to nominate a different CFPB director (which could happen if the Senate does not confirm Trump's eventual nominee, or after that nominee's term expires, or if that director, similar to Richard Cordray, doesn't stay for the whole term)? What if the statute of limitations hasn’t expired on a claim? Could the CFPB then enforce the guidance? Wouldn't your client also have to fear private claims?
Mark Budnitz generously gave me the benefit of his immediate reactions and has given me permission to post them here; he adds that he encourages others to correct any errors and contribute their responses as well:
[His first] reaction was that this probably makes no difference. Under Mulvaney and his successor, the CFPB will ignore any guidance that is favorable to consumers. Besides, a guidance does not have the full force of law like a regulation. Eventually, the Director probably will withdraw any Guidance that he believes is too favorable to consumers. I’m not sure what the Administrative Procedure Act or Dodd-Frank say, if anything, about the procedures that have to be followed to withdraw or amend a guidance.
If I was counseling a business client, I’d probably advise ignoring agency guidance, but warn about possible consequences after 2020. Of course, even if a Democrat wins in 2020, Trump’s permanent Director will still be in charge for a while. And it may be a long while if Trump delays naming a permanent Director and/or the Democrats hold up consideration of his nominee.
If I was representing a consumer in a UDAP case, I would refer to the guidance, hoping the judge would be persuaded it correctly interpreted and applied the law, regardless of the CFPB’s ignoring it. I believe most UDAP laws (not all) direct the courts to follow the FTC's interpretations of the FTC [Act]. * * *
