Emma Gallimore Mar. 9, 2016, 2:06pm


WASHINGTON (Legal Newsline) — J.G. Wentworth will have to face a civil investigation demand after the director of the Consumer Financial Protection Bureau denied the company's petition to set it aside.

The CID was issued on Sept.11 and contained 14 document requests, seven interrogatories and two requests for written reports all related to J.G. Wentworth's purchasing of structured settlement and annuity payments.

J.G. Wentworth delivers financing through mortgage lending and refinancing, personal and business lending, annuities and structured settlements and prepaid cards.

“It appears that the CFPB is investigating J.G. Wentworth to determine if their business of purchasing structured settlements and annuity payments, or any ancillary aspects of that business, violate federal consumer financial law,” said Jonathan Kolodziej of Bradley Arant Boult Cummings in Birmingham, Ala.

The terms of the Consumer Financial Protection Act and the CFPB’s rules regarding investigations set out a process for challenging CIDs issued by the CFPB. In order to do so, an organization must have communicated with the CFPB through a meet-and-confer process and attempted to resolve the issues.

During meetings with the CFPB on Sept. 21 and Sept. 29, J.G. Wentworth asserted that the CFPB lacked jurisdiction. A deputy enforcement director denied its request for a retraction on those grounds.

On Oct. 1, the company filed its formal petition on the grounds that the CFPB lacked the authority to issue the CID. Its argument was three-pronged.

First, it said that J.G. Wentworth is not a covered person as defined by the CFPA because it does not offer or provide consumer financial products or services. Second, it asserted that the Truth in Lending Act and its regulations do not apply to its business but only to individuals or businesses that offer or extend credit. Third, that the CFPB had already exhausted its authority through earlier CIDs.

J.G. Wentworth had already responded to CIDs in April 2014 and April 2015. It argued that the CFPB already had enough information about its business.

By rejecting J.G. Wentworth’s request, the CFPB is continuing a pattern of enforcing CIDs regardless of requests to modify or remove them. The organization’s rules endow the director, currently Richard Cordray, with the power to approve or reject modification and retraction requests.

“This means that the director of the CFPB is tasked with evaluating and ruling on CIDs issued by the agency he is in charge of,” Kolodziej said. “Therefore, it isn’t surprising that, to date, the bureau has not made public any decisions to actually grant a petition to modify or set aside.”

In this case, the director stated that fact-based challenges would not prevail in a challenge to a CID.

J.G. Wentworth had 21 calendar days to comply with the CID. If it didn't comply, the CFPB could have filed suit in federal district court.

“If that were to happen, J.G. Wentworth would have another opportunity to try and have the CID set aside,” Kolodziej said.

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Consumer Financial Protection Bureau
1700 G St NW
Washington, DC 20552

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