CFPB Denies Habematolel Pomo of Upper Lake Petition to Dismiss Civil Investigative Demands

Mar 9, 2020Federal Regulation, News, Tribal Sovereignty

Last month, the Consumer Financial Protection Bureau (CFPB) denied a petition filed by companies owned by the Habematolel Pomo of Upper Lake Indian Tribe seeking to set aside civil investigative demands (CIDs) issued in October 2019. Specifically, the companies petitioning the Bureau are Golden Valley Lending, Inc.; Majestic Lake Financial, Inc.; Mountain Summit Financial, Inc.; and Upper Lake Processing Services, Inc.

The Bureau had previously brought an enforcement action against the four companies, which was voluntarily dismissed without prejudice in January 2018. That action alleged that the companies violated prohibitions on unfair, deceptive, and abusive acts and practices (UDAAP), in addition to violating the Truth in Lending Act by failing to disclose annual percentage rates on their offered loans.

In October 2019, the Bureau issued the CIDs in question, which are seeking information on whether violations of the UDAAP prohibitions have taken place by “collecting amounts that consumers did not owe or by making false or misleading representations to consumers in the course of servicing loans and collecting debts.”

In the companies’ petition, five arguments are made for why the CIDs should be tossed out. First, they claim that the Bureau lacks authority to investigate entities that are arms of the tribe. Second, they say that the companies cannot comply with the CIDs without violating a protective order issued by a tribal regulator. Third, the CIDs lack a proper purpose. Fourth, the CIDs are overly broad and unduly burdensome. Finally, the companies say the CIDs should be withdrawn or stayed until the Supreme Court makes a ruling in the pending Seila Law case, which is expected to determine whether the Bureau’s structure violates the U.S. constitution.

On all five points, the Bureau disagreed with the Tribe’s businesses, denying the petition and directing the companies to comply with the CIDs in full within 30 calendar days. As the response was dated February 18, that gives the tribal businesses until March 19 to respond.

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