J.G. Wentworth Cites New Opinion to Argue CFPB Lacks Authority

J.G. Wentworth Cites New Opinion to Argue CFPB Lacks Authority

As described in previous Secondary Insurance Market Blog posts (such as those here, here and here), the Consumer Financial Protection Bureau has sought to investigate structured settlement factoring company J.G. Wentworth, which argued that the CFPB lacked authority to conduct such an investigation.

In the lawsuit brought by the CFPB to enforce its investigation, J.G. Wentworth recently cited a new opinion as supplemental authority in its arguments.

In a filing with the court last week, J.G. Wentworth cited CFPB v. Harbour Portfolio Advisors, No. 16 Civ. 14183 (E.D. Mich., Feb. 16, 2017), to assert that the CFPB lacks jurisdictional authority to enforce a civil investigative demand (“CID”) into J.G. Wentworth’s business practices.

Argued J.G. Wentworth, in its supplemental authority filing:

In Harbour, the court examined the features of the agreements with consumers and held that they ‘might constitute “credit” . . . because they obligate the purchaser to pay a principal sum plus interest . . .’ and some included ‘a promissory note . . . [with] an acceleration clause . . .’ . . . .  This holding was essential, as a Bureau CID must be predicated on a viable theory of a violation arising under Federal consumer financial law, such as a one involving an extension of ‘credit’ or another consumer financial product or service

J.G. Wentworth further argued that “there is no plausible claim” that J.G. Wentworth’s “business of purchasing structured settlement payments involves extensions of credit, and the Bureau has failed to demonstrate jurisdictional authority” because transfers of structured settlement payment rights involve “a one-time exchange” and payees “are not obligated to make any future payments, much less payments of principal and interest” nor do the transactions involve a promissory note, acceleration clue, “or any other indicia of credit, and every completed transaction is court-approved, as a sale.”

Concludes J.G. Wentworth: “There is no plausible claim they involve credit or any other consumer financial product or service, and the Bureau therefore patently lacks authority to issue the CID.”


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