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List of Businesses and other Entities

Within CFPB Jurisdiction

Conference Committee Base Text (HR 4173)

 

 

The jurisdictional reach of the Consumer Financial Protection Bureau (CFPB) is unprecedented.  Although certain businesses and other entities have been excluded from CFPB jurisdiction, and the base text has replaced the expansive definition of "financial activities" with a definition of "financial product or service," the jurisdictional reach of the proposed new agency remains quite broad, encompassing at least 35 different businesses and entities.   

 

The definitions in the proposed Conference Committee Base Text (found in Section 1002) are virtually unchanged; the definitions that set the boundaries for the jurisdiction of the new consumer regulator are written in sweeping language.  Here are five key terms (italics added): 

 

Paragraph (5): Consumer financial product or service: "any financial product, or service …offered or provided for use by consumers primarily for personal, family, or household purposes."

 

Paragraph (6): Covered person: "(A) any person that engages in offering or providing a consumer financial product or service; and any affiliate of a person described in subparagraph (A) if such affiliate acts as a service provider to such person."

 

Paragraph (7):  Credit:  the right to "defer payment of a debt, incur debt and defer its payment, or purchase property or services and defer payment for such purchase."

 

Paragraph (8): Deposit-taking activities:  "(A) the acceptance of deposits, the maintenance of deposit accounts, or the provision of other services related to the acceptance of deposits . . . ; (B) the acceptance of funds, the provision of other services related to the acceptance of funds. . . ; or (C) the receipt of funds or its equivalent . . . for the purpose of facilitating a payment or transferring funds or value of funds by a consumer to a third party."

 

Finally, Paragraph (15): Financial product or service: contains an expansive enumeration of products and services that would be brought within the purview of the new consumer regulator.

 

The operation of these definitions means that the following extensive, but by no means exhaustive, list of individuals and entities would be subject to CFPB jurisdiction.

List of Businesses and Other Entities Within CFPB Jurisdiction

 

 

  1. Banks

 

  1. Thrifts

 

  1. Credit unions

 

  1. Finance companies

 

  1. Pay day lenders

 

  1. Pawn shops 

 

  1. Currency exchanges

 

  1. Retail stores offering in-house credit or deferred payments

Section 1027(a) excludes "merchants, retailers, and other sellers of nonfinancial services" from the CFPB's jurisdiction with respect to credit extended directly by the merchant, retailer, or seller of nonfinancial goods or services… exclusively for the purpose of enabling that consumer to purchase nonfinancial goods or services directly from the merchant…"  However, the exclusion does not apply to (1)any credit transaction that the merchant sells or assigns; (2) to any credit transaction in which the credit provided exceeds the market value of the non-financial good or service; (3) if the "sale" of the good or service is found to be a "subterfuge so as to evade or circumvent" the provisions of the CFPA; and (4) if the credit transaction is subject to a finance charge or payable by written agreement in more than 4 installments.

 

  1. Mortgage loan servicers

Section 1002, paragraph 15(A)(i) extending credit and servicing loans; see also Title XIV, subtitle E

 

  1. Mortgage loan brokers 

Section 1002, paragraph 15(A)(i) extending credit and servicing loans, including acquiring, purchasing, selling, brokering; see also Title XIV, subtitle A

 

  1. Real estate appraisers, real estate appraisal companies, and real estate appraisal management companies 

Section 1002, paragraph 15(A)(iii), performing appraisals of real estate and personal property.

 

  1. Automobile dealers and leasing companies

The base text does not include an express exclusion for automobile dealers; they would be covered if they provide any deferred payment terms, whether for sales or service. See Section 1002, paragraph 15(A) (i).

 

  1. Automobile appraisers, if the car appraisal is made for purposes of evaluating collateral for a loan. 

Section 1002, paragraph 15(A)(iii)

 

  1. Jewelry/art/antiques appraisers, if the personal property appraisal is made for purposes of  evaluating collateral for a loan 

Section 1002, paragraph 15(A)(iii)

 

  1. Check guaranty services, e.g., TeleCheck, CrossCheck

Section 1002, paragraph 15(A)(vi)

 

  1. Consumer credit reporting agencies

Section 1002, paragraph 15(A)(ix)

 

  1. Debt collectors, not limited to debt collection companies, but rather including any firm that collects debt "related to any consumer financial product or service"

Section 1002, paragraph 15(A)(x)

 

  1. Real estate settlement companies

Section 1002, paragraph 15(A)(iii)

 

  1. Real estate agents and brokers

Section 1027(b) excludes from CFPB jurisdiction all activities of a licensed or registered real estate agent or broker except "to the extent such person is engaged in the activity of offering or providing any consumer financial product or service" or is otherwise subject to any enumerated consumer law or any law for which authorities are transferred to CFPB jurisdiction. (Section 1027(2))

 

  1. Investment advisors (not subject  to regulation by or required to register with the CFTC, SEC, or any state agency performing like functions)

Section 1002, paragraph 15(A)(viii).

 

  1. Financial advisors

Section 1002, paragraph 15(A)(viii) providing financial advisory services to  consumers on individual financial matters (other than services related to securities provided by a person regulated by the Commission or a state securities commission but only to the extent that such person acts in a regulated capacity)

 

  1. Broker-dealers

Section 1002, paragraph 8(A) deposit taking; 15(A)(i) extending credit

 

  1. Non-depository trust companies

Section 1002, paragraph 15(a)(iv)otherwise acting as a custodian of funds or any financial instrument for use by or on behalf of a consumer; 15(A)(viii)providing financial advisory services to consumers on individual financial matters or relating to proprietary financial products or services

 

  1. Family trust offices

Section 1002, paragraph 15 (A)(viii)providing financial advisory services (other than services related to securities provided by a person regulated by the Commission or a state securities commission but only to the extent that such person acts in a regulated capacity)to consumers on individual financial matters or relating to proprietary financial products or services

 

  1. Deposit intermediation services, e.g., Promontory and others

Section 1002, paragraph 15(A) and 8(A)and (B) deposit taking activity means the acceptance of deposits… the provision of other services related to the acceptance of funds; 15 (A)(viii)providing financial advisory services to consumers on individual financial matters or relating to proprietary financial products or services

 

  1. Debt settlement, debt negotiation, or mortgage relief service providers

Section 1002, paragraph 15(A)(viii) providing financial advisory services to  consumers on individual financial matters… including (II) providing services to assist a consumer with debt management or debt settlement , modifying the terms of any extension of credit, or avoiding foreclosure

 

  1. For-profit and not-for-profit credit counselors

Section 1002, paragraph 15(A)(viii) providing financial advisory services to  consumers on individual financial matters… including (I) providing credit counseling

 

28. Tax preparers

Section 1027(d) excludes tax preparers except to the extent such person is engaged in any activity which is not a "customary and usual accounting activity…but which is the offering or provision of any consumer financial product or service."  In addition, the CFPA retains authority to regulate these entities pursuant to any of the 13 laws transferred to its jurisdiction.

 

29. Accountants

Section 1027(d) excludes state licensed or certified accountants except to the extent such person is engaged in any activity which is not a "customary and usual accounting activity…but which is the offering or provision of any consumer financial product or service."  In addition, the CFPA retains authority to regulate these entities pursuant to any of the 13 laws transferred to its jurisdiction.

 

30. Attorneys

Section 1027(e) provides a limited exclusion for attorneys.  It bars the CFPB from exercising "any authority to conduct examinations of an attorney licensed by a State, to the extent that the attorney is engaged in the practice of law under the laws of such State."   However, the exclusion does not apply "to an attorney who is engaged in the offering or provision of any consumer financial product or service, or who is otherwise subject to any enumerated consumer law or any law for which the authorities are transferred" to the CFPB.

 

  1. Money transmitters/wire transmitters, e.g., Western Union, PayPal, and others

Section 1002, paragraph 15(A)(v)

 

  1. Sellers or issuers of stored value cards

Section 1002, paragraph 15(A)(v) However, a seller of stored value is subject to the CFPB jurisdiction only if the seller exercises "substantial control over the terms and conditions of the stored value"

 

  1. Money services businesses

Section 1002, paragraph 15(A)(vi)providing check cashing

 

34. Financial data processors

Section 1002, paragraph 15(A)(vii) defines as a financial product or service "providing payments or other financial data processing products or services to a consumer by any technological means, including providing processing or storing financial or banking data for any payment instrument, or through any payments system or network used for processing payments data, including payments made through an online banking system or mobile communications network,"  except that merchants, retailer or sellers of nonfinancial goods or services are expressly excluded to the extent that they transmit or store payments data about a consumer exclusively for the completion of the non-financial commercial transaction.  In addition, entities that provide access to a host server for purposes of website maintenance are excluded. This language is significantly broader than that of both S. 3217 and H.R. 4173.

 

The Conference Committee Text also adds a new definition for electronic conduit services –"The provision by a person of electronic data transmission, routing, intermediate or transient storage, or connections to a telecommunications system or network."  The definition expressly excludes services in which the entity "selects," "modifies," or "differentiates" the content of electronic data, and was presumably intended to describe entities that provide only "back office" data processing, data transmission, or storage services to financial institutions.  However, the definition of electronic conduit services is not cross-referenced within the section defining financial data processors.  As a result, the CFPB has the flexibility to assert jurisdiction over the following entities depending on the nature of the services provided to a covered person:

 

·         Core processors, such as EDS, Fidelity, Metavante, Jack Henry, and others

 

·         Data storage providers, e.g., Iron Mountain and others

 

·         Data transmission service providers, including providers of check imaging services and ATM network providers, e.g., Fiserv, EFT, First Data, Fidelity, and others

 

·         Data transmission software and hardware designers, including manufacturers of ATMs and remote capture machines, e.g., Diebold, NCR, Fuijitsu, Microsoft, and others

 

·         Third-party software and hardware providers, e.g., BSA/AML monitoring software and hardware: OFAC screening software/service; disaster recovery software and hardware, etc. 

 

·         Third-party IT advisors and systems providers

 

·         Network security advisors and systems providers

 

 

  1. And the catchall, virtually limitless, grant of jurisdiction— paragraph15(A)(xi):  

Such other financial product or service as may be defined by the Bureau, by regulation, for purposes of this title if the Bureau finds that such financial product or service is—

 

      • Entered into or conducted as a subterfuge or with a purpose to evade any federal consumer financial law; or
      • Permissible for a bank or a financial holding company to offer or to provide under any provision of a Federal law or regulation applicable to a bank or a financial holding company, and
      • Has, or likely will have, a material impact on consumers.

 

 Questions?   Please contact Virginia O'Neill for more information.