Fifteen Democratic senators have asked the inspector general of the Consumer Financial Protection Bureau to investigate a recent sharp drop in restitution provided to consumers under Director Kathy Kraninger.
In a letter to Inspector General Mark Bialek, who also serves as the chief watchdog of the Federal Reserve, the senators cited four specific cases in which they said Kraninger refused to provide restitution to consumers in a departure from established standards set by the courts.
The senators said Kraninger rejected an offer by a company to repay $1.3 million to harmed consumers, and in another settlement only gave restitution to consumers who specifically complained about a false threat or misrepresentation.
“The Bureau appears to be ignoring existing legal authority for calculating restitution in order to reduce the amount of restitution returned to harmed consumers or undercount the consumers who should receive restitution,” wrote the lawmakers, led by Sens. Sherrod Brown, D-Ohio, and Catherine Cortez Masto, D-Nev.
“The Bureau’s approach to restitution under Director Kraninger also creates a perverse incentive for companies to violate the law by allowing them to retain all or nearly all of the funds they illegally obtain from consumers,” they wrote.
The senators include three presidential candidates: Amy Klobuchar, D-Minn., Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass. (Sanders caucuses with Democrats in the Senate.)
in settlements last year, the CFPB fined but did not ask for any refunds or restitution from
The letter provided more details of the cases and cited an October investigation by the House Financial Services Committee that found Kraninger overruled career staff in not asking for restitution.
Among the more surprising cases was
Yet the CFPB limited restitution "only to those consumers who affirmatively complained about a false threat or misrepresentation,“ the senators wrote. The CFPB required the company pay $36,800 in restitution and a $200,000 civil money penalty.
“The result is that consumers whom ARA subjected to illegal threats and misrepresentations in order to induce them to make payments but did not complain received no restitution,” the senators wrote. “In all four cases, the Bureau made a conscious decision to disregard legal precedent in order to allow companies that violated the law to keep all, or nearly all, of the money they illegally collected from consumers."
"This new approach to providing restitution to consumers is fundamentally at odds with the Bureau’s mission: it fails to provide relief to victimized consumers, it allows bad actors to retain the profits from their illegal conduct, and it is unfair to those companies who follow the law,” the letter stated.
The senators who signed the letter included Richard Blumenthal, D-Conn., Ron Wyden, D-Ore., Tammy Duckworth, D-Ill., Cory Booker, D-N.J.., Tina Smith, D-Minn, Chris Van Hollen D-Md., Ben Cardin D-Md., Ed Markey, D-Mass., Jacky Rosen, D-Nev., and Dick Durbin, D-Ill.
