In the United States, one of the bodies that are mandated with ensuring best practice in business and adhering to ethical standards is The Consumer Financial Protection Bureau. According to the official website of the bureau, it engages in providing advisory and legal services to consumers about financial services offered. Furthermore, the bureau also acts as a regulatory body where it supervises the activities of banks. In case customers have complaints regarding the services they have received from financial institutions, they can approach the bureau for assistance (United States Government, 2019). The current business world is marred by malpractices where financial institutions take advantage of unsuspecting customers. There are instances where banks and other lenders give false or incomplete information when consumers are applying for loans. There are also some institutions that charge high-interest rates on loans or subject clients to hidden chances. Such cases have prompted the bureau to take stringent measures to ensure that ethical standards are upheld and that consumers are effectively protected from unscrupulous financial institutions.
Mission Settlement Agency
One of the challenges facing virtually every American is debt. Therefore, some financial institutions have come up with ways to defraud consumers by claiming that they can help them reduce their debt. In 2013, a case was brought before the Manhattan District Court where the company Mission Settlement Agency was charged with financial malpractices. According to Raymond (2013), this was the first criminal case done by the newly established bureau in the United States as the nation sought to put an end to financial companies that took advantage of customers. According to the lead attorney in the case, Preet Bharara the case would not be the first one as investigations had established that there were several companies that had been involved in unlawful activities in the debt settlement industry. Investigations into the case had established more than 1,200 clients had fallen prey to the scheme by Mission Settlement in what totaled more than $2 million in money collected from clients (Raymond, 2013). The investigation commenced when some customers complained that despite making periodic payments to Mission Settlement, there was no money that had been given to creditors.
Further investigations in conjunction with the Federal Bureau of Investigations revealed that some of the persons working for Mission Settlement had priors financial fraud cases. For instance, one lawyer named Michael Levitis had been charged for lying before a court in corruption charged involving a former U.S. senator (Raymond, 2013). The general realization from the case is that some financial institutions take advantage of the financial problems facing consumers so that they can make dishonest and quick cash. Hiilamo (2018) explains that virtually every household in the United States is in some kind of debt. The debt crisis has therefore driven some Americans to take desperate measures as a way of avoiding to pay what they owe. The situation has led some financial institutions to take advantage of consumers by claiming that they can assist them in reducing the debt. Hence, The Consumer Financial Protection Bureau plays a crucial role in ensuring that consumers are educated on issues about debt management, and how to avoid being defrauded.
Amerisave Mortgage Corporation
In 2014, The Consumer Financial Protection Bureau successfully sought redress to persons who had been victims of fraud by the Amerisave Mortgage Corporation. The case that was filed by the bureau on behalf of the victims accused the corporation in lying to the customers on some issues including the best mortgage rates. The corporation was found to have violated various legislations about the conduct of businesses in the financial sector. For instance, the corporation violated the Mortgages Acts and Practices (MAP), Real Estates Settlement Procedures Act (RESPA), and Truth in Lending Act (TILA) as explained by (Consumer Financial Protection Bureau, 2019). These are some of the common issues that the commission often deals with when protecting clients. In such a case, the bureau receives compensation on behalf of the victims and then distributes the money to the victims. In this case, the corporation was required to pay the complainants a sum of more than $14 million. In some instances, companies accused of unlawful acts opt to settle the case out of court. The Amerisave case is one of the cases where the corporation agreed to the accusations and opted to settle the sum after the bureau took it to court.
CFPB v. Colfax Capital Corporation – Case No. 2014-CFPB-0009
There are also other cases where the accused parties opt to continue with civil case thereby avoiding outside settlement as is the case against Colfax Capital Corporation. The Consumer Financial Protection Bureau accused Colfax of hiding the expensive charges given to consumers when signing financial contracts. The tactic used by the company was to inflate the prices of the goods and services the client were purchasing so that eventually, the value of the contract being signed would also be high. The case against Colfax is that it violated the laws stipulated by TILA that required companies to ensure that they disclosed all the financial information to consumers as explained by the Consumer Financial Protection Bureau (2019). Colfax denied the charges and the case went to full litigation where the court decided that Colfax should pay the victims the amount claimed. The case gives an example of situations where the Consumer Financial Protection Bureau is compelled to take accused to court and gather evidence against the accused. In some instances, the bureau is often compelled to cover the costs of such litigation. However, if the bureau wins the case the court forces the defendant to pay the bureau the sum used in the litigation. The bureau often has the mandate of conducting investigations and gathering evidence against offenders. In such cases, the bureau is often required to work in conjunction with other parties such as law enforcement institutions and forensic auditing companies, to ensure that they can successfully find justice for consumers.
CFPB v. Global Client Solutions
There are situations where the Consumer Financial Protection Bureau can get redress and the court also order the defendant to pay a given sum to victims. Such a situation occurs if the court requires the bureau to take care of the cost of the litigation, and then eventually the bureau wins the case. Such a case occurred when the bureau accused Global Client Solutions of some financial malpractices. The case against Global Client Solutions is that the company assisted a debt relief company is lying to customers that they could be helped to lower their debts. In the case, the bureau and the court found the company to violate acts stipulated TILA that required financial institutions to provide all the required information to clients before collecting money. Therefore, Global was subsequently banned from working with financial relief companies. In such a situation where the consumers are many, the bureau takes the role of collecting the compensation from the defendant and then distributing it to clients. However, the bureau is not actively involved in such issues but sub-contracts third parties to distribute the checks to victims and respond to all the concerns by the victims (Consumer Financial Protection Bureau, 2019). The bureau’s mandate does not end with fighting for the legal rights of clients but extends to ensuring that customers receive their money. Therefore, in other instances, the bureau works with other stakeholders to ensure that the money is duly compensated. Also, the bureau plays the role of protecting consumers from fraud. In the case of Global, the bureau was compelled to ban the company from dealing with debt relief companies. The move was taken to ensure that such cases do not occur in the future and that customers are effectively protected.
The discussion has established that the Consumer Financial Protection Bureau plays a crucial role in protecting the financial interests of consumers. Trade requires regulation to protect businesses and consumers from dishonest and unethical acts. However, legislation cannot effectively protect consumers unless there is a body established to deal with arising situations. The central body plays the role of educating consumers on how to avoid being victims of fraud.
Furthermore, such a body supervises the activities of companies involved within its field of jurisdiction to ensure that malpractice can be detected and prevented before it occurs. The Consumer Financial Protection Bureau plays the role of protecting consumers by ensuring that legislation about activities in the financial sector is upheld. Furthermore, the bureau also takes action against companies that defraud customers, and then they further seek redress for the victims.
Consumer Financial Protection Bureau. (2019). Amerisave Mortgage Corporation; Novo AppraisalManagement Corp.; and Patrick Markert. – Case No. 2012-0021-02. Retrieved March 8, 2019, from Consumer Financial Protection Bureau: https://files.consumerfinance.gov/f/documents/cfpb_amerisave-mortgage-corporation_victim-compensation_closed.pdf
Consumer Financial Protection Bureau. (2019). CFPB v. Colfax Capital Corporation – Case No. 2014-CFPB-0009. Retrieved March 8, 2019, from Consumer Financial Bureau: https://files.consumerfinance.gov/f/documents/201706_cfpb_v_colfax-capital-corporation-CLOSED.pdf
Consumer Financial Protection Bureau. (2019). In the Matter of CFPB v. Global Client Solutions, et al.Case No. 2:14-cv-06643-DDP-JPR. Retrieved March 3, 2019, from Consumer Financial Protection Bureau: https://files.consumerfinance.gov/f/documents/201706_cfpb_Global-Client-Solutions.pdf
Hiilamo, H. (2018). Household Debt and Economic Crises. Northampton, MA: Edward Elgar.
Raymond, N. (2013, May 7). The U.S. brings charges in the first criminal case for the consumer agency. Retrieved March 8, 2019, from Reuters: https://www.reuters.com/article/us-cfpb-criminal/u-s-brings-charges-in-first-criminal-case-for-consumer-agency-idUSBRE9460LO20130507
United States Government. (2019). Consumer Financial Protection Bureau. Retrieved March 8, 2019, from the United States Government: https://www.usa.gov/federal-agencies/consumer-financial-protection-bureau