CFPB Warns Of Service Provider Scrutiny

The Consumer Financial Protection Bureau ("CFPB" or "Bureau") published a bulletin clarifying that it "expects supervised banks and nonbanks to oversee their business relationships with service providers in a manner that ensures compliance with Federal consumer financial law" on April 13, 2012.

This bulletin signals that the Bureau is focusing its supervision and enforcement efforts on both direct providers of consumer financial products and services and their service providers, including companies involved in advertising and marketing, lead generation and affiliate marketing, fulfillment, other back-office services, and customer service.

The bulletin makes clear that the CFPB views the use of service providers as "often an appropriate business decision," but that entering into a business relationship with a service provider "does not absolve" the supervised entity of responsibility for complying with Federal consumer financial law to avoid consumer harm. In