3rd Circuit Says CFPB May Investigate the Totality of a Target’s Business Conduct

Earlier this week, the 3rd Circuit rejected student loan servicer Heartland Campus Solutions, ECSI’s challenge to a CFPB civil investigative demand (CID), which sought information concerning ECSI’s "servicing of student loans, including processing payments, charging fees, transferring loans, maintaining accounts, and credit reporting[.]" While ECSI is the latest in a string of CID recipients challenging the scope of an investigation, one of ECSI’s primary objections is novel.

The company argued that if the Notification of Purpose listed just one of the five activities specified, the CID would have satisfied the statutory notice requirements of 12 U.S.C. § 5562(c)(2). The 3rd Circuit, for its part, considered this argument a concession, holding that the Bureau may investigate the totality of a target’s business without rendering the issuing CID "borderless." The court explained that "[b]ecause the conduct under investigation covers the entirety of its student loan servicing business operations, the requests, which all relate to ESCI’s student loan servicing, are relevant to the CFPB’s investigatory purpose."

In a forthcoming post, we’ll offer further analysis of the 3rd Circuit’s decision and how it fits with other recent decisions addressing CFPB CIDs.

To read the full decision, please click here.