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Posts from December 2012

Protecting funds from the Cobell v. Salazar settlement


Hundreds of thousands of Native Americans started getting the first payments last week as part of a long-awaited settlement with the federal government over its management as trustee of Individual Indian Money Accounts. The settlement, commonly known as Cobell v. Salazar, means the arrival of funds for Native Americans across the country. Cash payments like this can be a great opportunity for consumers to build up their assets—but we also anticipate scammers targeting settlement recipients, looking to separate these communities from their money.

If you received money from the Cobell settlement, here are some simple steps you can take to protect your money:

  • Take your time. Beware of “opportunities” that force you to make a snap decision—high pressure “act now” offers are often used to keep you from understanding the true costs and risks of a product. Never sign anything without asking questions and understanding it first. If necessary, ask a trusted relative, friend, tribal official, or attorney for a second opinion before acting.
  • Pay off debt. If you took out a loan anticipating money from the settlement or use other expensive credit products, the settlement check is a good opportunity to pay down that debt.
  • Save. Consider using the settlement funds to start saving. People with savings are better prepared to handle financial emergencies—like a major car or home repair—and are less likely to rely on expensive debt.

We also want to remind companies that are planning on doing business with Cobell recipients to conscientiously comply with all consumer protection laws. CFPB is charged with protecting consumers from unfair, deceptive, abusive, or discriminatory financial practices, which could impact Cobell recipients. The enforcement team will continue to be on the watch for scams and other harmful financial products that target Native Americans. Consumers and tribal leaders shouldn’t hesitate to let us know if they are seeing financial practices that are deceptive, unfair, abusive, or discriminatory.

Report problems with payday loans, settlement anticipation loans, auto loans, or anything bought with credit. Submit a complaint online at or call us at (855) 411-2372.

You can also:

If you think you’ve been scammed, report suspected fraud immediately. The longer you wait, the more difficult it could be to get your money back when appropriate.

Responding to the Cobell settlement is one part of our broader ongoing collaboration with tribal governments and consumers across Indian Country. We’re excited about opportunities to advance consumer education and empowerment in tribal communities, carefully examine consumer protection concerns in Indian Country, and partner with tribal officials to prevent harmful practices targeting Native American consumers.

Giving or receiving gift cards? Know the terms and avoid surprises


My family and I just moved into a new house. With all the packing and unpacking, my kids and I found three gift cards we had forgotten about. Mine was from my birthday, almost a year ago. Theirs were from last Christmas. So while most consumers are shopping for this year’s holiday season, we’re putting the wraps on last year by spending these long-lost gift cards.

If you have old gift cards sitting around, you might want to consider doing the same. Federal rules say that gift cards cannot charge inactivity or service charges for 12 months, but after that first year, these fees could start to eat away at your card’s value.

If you find a gift card that has an expiration date, call the phone number on the card to see if the funds are still available. Under current federal law, a gift card cannot be sold that will expire in less than five years. If funds are still available to you, a new card must be issued at no cost to you. Your state may provide additional protections and rights.

Thinking about giving a gift card to someone for the holidays?

Here’s a quick rundown of the different kinds of cards:

  • Store gift cards
    Branded by a single merchant or group of merchants, and can only be used at those stores.
  • Network branded gift cards
    These will have a logo like American Express, Discover, MasterCard, or Visa and can be used wherever the network credit cards are used. They are reloadable, which means the recipient can add more money to them when they run out.
  • Reloadable prepaid cards
    You can use these cards the same way you’d use reloadable gift cards, but the rules that cover these cards are not the same. If it isn’t sold as a gift card, then the federal rules that cover gift cards don’t apply. For example, for such cards, the card issuer might immediately start charging fees, like monthly service fees.

When you give the card, give the terms and conditions and the receipt, too. The terms and conditions are sometimes included in the original packaging. Also, consider the financial condition of the business offering the card. For example, if you give a store gift card and the retailer goes under, the card may not be redeemable. Also, if locations near your recipient close, the card may be harder to use.

If you get a card as a gift

Here’s how to make sure you’re getting the most out of it.

  • Gift cards should spell out what fees they charge, so read the fine print. For example, even though the federal rules are the same for all gift cards, additional policies may be set by the merchant or bank issuing the card. Be sure you understand these policies.
  • What happens if you lose your card or if it’s stolen? Some issuers, like stores, might not replace them . Other issuers might replace the card, but only if you registered it before it was lost or stolen.Use the card sooner, rather than later. Take my word for it, these cards can be easily misplaced and forgotten.
  • Write down the card number, security code, and customer service phone number and keep them in a safe place.
  • Treat the card like cash, especially if the issuer will not replace it, and keep your card until you are sure you will not be making any returns. Some merchants require that refunds be added back to the card.

To learn more about pre-paid cards, Ask CFPB.

A joint enforcement action with states to stop illegal advance fees


Today, a federal district court entered an order that returns money to the pockets of American consumers and stops a company from violating laws. The case also represents a landmark for us: it’s the first time we’ve joined with state attorneys general in filing suit to enforce consumer-financial-protection laws. The order is a win for the company’s customers.

Payday Loan Debt Solution, Inc. (PLDS) is a debt-relief service provider that purports to help consumers settle their payday-loan debts. A Bureau investigation found evidence that PLDS routinely charged consumers a fee in advance of actually settling their debts. This practice violates the Federal Trade Commission’s Telemarketing Sales Rule, the Dodd-Frank Act, and the laws of various states.

We brought this lawsuit to stop PLDS’s unlawful practice and to obtain compensation for consumers who were unlawfully charged advance fees. Upon learning of the Bureau’s investigation, PLDS immediately ceased its unlawful conduct and has cooperated with the Bureau’s investigation. Today, the court enters an order that resolves this matter. The order:

  1. Finds that PLDS and its president, Sanjeet Parvani, engaged in practices that violated the federal consumer financial protection laws and the laws of several states;
  2. Enjoins PLDS and Parvani from engaging in the unlawful conduct in the future;
  3. Requires PLDS to pay $100,000, amounting to full restitution for consumers who were charged advance fees, but who received no debt-settlement services from PLDS by the time their accounts were closed;
  4. Requires PLDS to pay to the Bureau $5,000 in a civil money penalty; and
  5. Requires PLDS and Parvani to cooperate with the Bureau in any future investigations of other entities related to the transactions that are the subject of the complaint.

This was our first joint enforcement action with state attorneys general. As we sought to enforce federal consumer protection laws, the states of Hawaii, New Mexico, North Carolina, North Dakota, and Wisconsin all joined our investigation and lawsuit to enforce their own laws. Today’s order grants complete injunctive relief to consumers under the laws of these states, as well as restitution to harmed consumers there and elsewhere.

The court order includes instructions to pay a civil monetary penalty. PLDS and Parvani immediately ceased the unlawful conduct and cooperated with our investigation, which helped limit the size of the civil penalty.

This matter affects only a single debt-relief service provider, but it is part of our comprehensive effort to police the debt-relief industry. Our work focuses not only on debt-relief service providers, but also on their partners, including those who facilitate their unlawful conduct and who may also run afoul of the federal consumer financial protection laws.

Save the Date, Baltimore, MD, and Atlanta, GA!


Join us for two events on mortgage policy. On Thursday, Jan. 10, 2013, we will hold a field hearing in Baltimore, Md. On Thursday, Jan. 17, 2013, we will hold a second field hearing in Atlanta, Ga.

Each event will feature remarks from CFPB Director Richard Cordray, as well as testimony from consumer groups, industry representatives, and members of the public.

More information on each event to follow.

To RSVP, email with:

  • Your full name
  • Your organizational affiliation (if any)

Realigning our supervision work


Today we’re announcing the reorganization of our Headquarters staff for Supervision. We will continue having two Supervision offices at Headquarters, but now we will have one focusing on examinations and one focusing on policy. This realignment is consistent with our mission to protect consumers across financial services markets without regard to the charter of the provider.

Until now, our Headquarters staff has been organized into offices for Nonbank and Large Bank Supervision. The previous arrangement made sense while the Bureau was starting its work, as we had two distinct supervisory mandates. In July 2011, we assumed the existing supervisory authority for consumer compliance from other federal regulators over large banks, thrifts, and credit unions. Our Large Bank Supervision team established the program that carries out this authority. Starting in January 2012, our Nonbank Supervision team built the first federal supervision program of its kind for nonbank entities, such as payday lenders and nonbank mortgage firms.

We have now successfully launched supervision programs for both nonbanks and large banks. Now our goal is to make these programs as efficient and effective as possible, and this reorganization will help us do that. We are reorganizing into two teams: the Supervision Examinations team and the Supervision Policy team.

The Examinations team will focus on many of the processes and work vital both to the team at Headquarters and to examiners throughout the country. The team will oversee our efforts to: recruit, train, and commission examiners; ensure policies and procedures are followed; and plan and execute examinations appropriately in light of our resources and priorities. The four regional offices will report to Supervision Examinations, and Paul Sanford will be the Acting Assistant Director of this Office.

The Policy team will ensure that policy decisions for supervision are consistent with both the law and our mission, and that they are consistent across markets, charters, and regions. We are organizing this office by product or service market rather than by the type of financial institution. Each of these teams will be responsible for developing supervision strategy and policy across both bank and nonbank markets. Peggy Twohig will be the Assistant Director of this Office.

Our goal has always been to have one cohesive supervision program, and this is another step in that process. All along, our regional examination staff has covered both nonbanks and large banks. This new organization will lead to a better and more coordinated approach to the markets we supervise and a sharper line of sight across both banks and nonbanks. Supervision is one of the Bureau’s key tools to ensure compliance with federal consumer financial law. Better coordination and visibility will help us better fulfill our mission.

Paying for college [beta]


Americans owe more than a trillion dollars in student loan debt. That’s more than we owe on credit cards, more than we owe on car loans – and it’s still growing.

So, if you’re going to invest in a college degree, we want you to choose the best deal for your situation. Here at the CFPB we’ve been doing extensive research these last few months. We talked with students and sat down with high school guidance counselors to find out how students make choices about how to pay for college.

We found some recurring themes: Students are overwhelmed with options and aren’t sure how to compare them. In the absence of apples-to-apples comparisons, they’re left to their own devices when making a choice that will have significant consequences for their financial future.

So, what to do about it?

We interviewed financial experts, lenders, policy wonks, and thousands of people like you. You tried our pilots and gave us great feedback – including the fact that this stuff is not easy to figure out — and we heard you.

We’ve distilled the things students said they wish they had known, what experts recommend, and what our pilots have told us could save you money into a set of tools to help you navigate the noise, and to support you every step of the way.

Highlights include:

Choosing a loan

We answer the questions we heard over and over from students trying to figure out how to choose, and offer three steps that can help you get the right loan for you.

Comparing financial aid

When student aid offer letters start arriving from colleges in the spring, you’ll be able to use this tool to make an apples-to-apples comparison between options. A previous pilot of this tool included more automated data, but it didn’t always reflect individual situations accurately. We’re hoping it works better with your personalized offers in hand.

Managing your college money

You’re not going to get the best deal if choosing your first bank account is sandwiched between your first week of classes and your first collegiate meal of instant ramen. This guide will help you plan to get settled financially before you even get to campus.

Repaying student debt

You’ll get a personalized recommendation based on every repayment scenario, whether you’re active-duty military, behind on your loans, working at a non-profit, all of the above, none of the above, or something else entirely.

Real talk

This set of tools is in beta. Which means the tools can only get better from here. But they can only get better if you tell us: Are there parts of this that are hard to use? Did you find jargon you don’t understand? Or, did you find something you’d never heard of before? Did we miss something? Would this help you know what to tell your kid sister about paying for college if she was just starting to look at schools? Let us know!