The CFPB’s suit alleged that Access used Smith as
the “independent professional advisor” for virtually
all of its Maryland transactions, despite the fact
that Smith had personal and professional ties to
Access that compromised his independence.
Additionally, the CFPB alleged that Access violated
the CFPA by providing consumers, many of whom
were cognitively impaired, with advances prior
to obtaining court approval of the purchase, then
representing to those consumers that they would
be liable for repaying those advances if they did not
cooperate with obtaining court approval.
Defendants responded with motions for Burford
abstention and a stay, or in the alternative, to
dismiss. In support of their motion to dismiss,
Defendants made arguments for why the CFPB
failed to state a claim upon which relief could be
granted. Defendants argued rst that Smith was
not a “covered person” under the CFPA. Defendants
further claimed that Smith was exempted from the
CFPA as an attorney giving legal advice under
the CFPA’s “practice of law exclusion.” Finally,
Defendants stated that the CFPB’s allegations
were no more than conclusory and that CFPB’s
count alleging that the payment advances were
abusive lacked sufcient specicity.
The U.S. District Court for the District of Maryland
(“Court”) ultimately denied the motions for Burford
abstention and stay, dismissed the four counts
regarding Smith’s conduct, and denied Defendants’
motion to dismiss the count regarding Access’s
allegedly abusive practices.
Jurisdictional and Prudential Claims:
The Court rst addressed whether there were
prudential or jurisdictional bars under Burford v.
Sun Oil Co., 319 U.S. 315 (1943), the doctrine of
issue preclusion, or the collateral attack doctrine.
Defendants argued that, under Burford, the Court
should abstain from issuing a decision that would
The Consumer Financial Protection Bureau
(“CFPB” or “Bureau”) is a U.S. government agency
created by the Dodd-Frank Wall Street Reform and
Consumer Protection Act. The CFPB is the rst
federal agency tasked solely with the mission of
consumer nancial protection. To this end, Congress
has vested it with enforcement, supervisory, and
rulemaking authority. In an effort to stay apprised
of signicant industry changes affected by the
CFPB, Burr & Forman’s CFPB Update will serve
as a periodic brieng on recent case law, news, and
developments related to the CFPB.
---- RECENT CASES ----
CFPA
Consumer Fin. Prot. Bureau v. Access Funding LLC, et
al.,
16-CV-03759-JFM, 2017 WL 4063737 (D. Md.
Sept. 13, 2017).
The CFPB led suit against Access Funding, LLC,
(“Access”) and attorney Charles Smith (“Smith”)
(collectively “Defendants”) alleging violations of
multiple provisions of the Consumer Financial
Protection Act of 2010, 12 U.S.C. §§ 5481 et. seq.
(“CFPA”). Access, a Maryland LLC, engages in
“structured settlement factoring,” a process in which
recipients of structured settlements exchange their
right to future payment streams for a discounted
lump sum. Such structured settlements exist to
compensate tort victims for personal injuries. Where
the structured settlement recipient has suffered
long-term physical or cognitive harm, 49 states,
including Maryland, require companies such as
Access to obtain court approval before purchasing
the payment stream. Before granting such approval,
courts must verify that the individual has consulted
with an independent professional advisor to ensure
that the transaction would be in the individual’s
best interest.
FALL
