CFPB Case Against Payment Processors Dismissed: Court Sanctions Bureau For Non-Responsive Discovery

In another significant litigation setback for the Consumer Financial Protection Bureau (CFPB or "Bureau"), a U.S. District Court in Atlanta imposed discovery sanctions against the Bureau and dismissed all claims against payment processors alleged to have aided and abetted an unlawful debt collection scheme. Cases brought by the CFPB's Division of Enforcement have seen the imposition of significant levels of damages as well as the imposition of severe penalties.¹ More recently, however, some litigants have pushed back with success against the CFPB, demanding that the Bureau be held to its burden of proving the factual and legal bases of its claims.²

A recent case involved a lawsuit in which the CFPB sought to hold accountable those alleged to have perpetrated a debt collection scheme targeting millions of consumers. But the CFPB did not limit its claims to those directly involved in the alleged debt collection scheme. The Bureau also sued the companies that