Credit Repair

CFPB Slaps Back at Credit Repair Group NACSO – Hard

Written by Steve Rhode

Not all that long ago the National Association of Credit Service Organizations (NACSO) sued the Consumer Financial Protection Bureau (CFPB) to have them back off the industry. You can see past posts, here.

NACSO had solicited funds from members to help pay for a suit filed by Greenspoon Marder against the CFPB. You can read the complaint here.

The trade association wanted the CFPB to stop hassling credit repair members about charging fees and also wanted the Telemarketing Sales Rule to go away.

Time will tell if they will be successful ion those efforts.

But the CFPB does not appear to be in any mood to play along. They just filed a motion to dismiss the complaint.

The court filing says, “NACSO’s Complaint alleges violations of the Administrative Procedure Act, 5 U.S.C. §§ 551 et seq. (APA), which permits challenges of final agency action. But the only final agency action identified in NACSO’s Complaint was taken not by the Bureau, but by the Federal Trade Commission (FTC), and the FTC is not a party to this action. Moreover, even if NACSO had brought its case against the FTC instead of the Bureau, the case would still have to be dismissed with prejudice pursuant to Fed. R. Civ. P. 12(b)(1) because there is no subject matter jurisdiction. In particular, the final agency action (taken by the FTC) that NACSO challenges occurred far outside the APA’s six-year limitations period, and that limitations period is jurisdictional.”

The case is summarized by the CFPB when it states,”NACSO filed its Complaint. It seeks review of the TSR under the Administrative Procedure Act. Comp. at ¶ 8. The Complaint includes three counts, all of which challenge the provision of the TSR that prohibits a telemarketer of credit repair services from receiving compensation for those services until six months after promised results have been achieved. The first count alleges that neither the FTC nor the Bureau has the authority to impose this six-month delay. Comp. at ¶¶ 48-59. In particular, it alleges that, when Congress enacted the Credit Repair Organizations Act in 1996, 15 U.S.C. § 1679 et seq., (CROA), this superseded the provision of the TSR restricting when credit repair services may request or receive compensation. The second count alleges that the six-month delay in compensation is a content-based restriction on speech that violates the First Amendment of the Constitution. Comp. at ¶¶ 60-72. And the third count alleges that the six-month delay is unconstitutional because it is an underinclusive restriction on speech. ¶¶ 73-79. The Complaint seeks a declaration that the promulgation of the TSR exceeded Congress’s grant of rulemaking authority, and that the TSR is unenforceable because it violates the Constitution.”

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The CFPB defends its position stating administrative and procedural reasons why the suit should be dismissed.

It is now NASCOs turn to disagree and spend billable hours to file the next document.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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