The Consumer Financial Protection Bureau (CFPB) brought action alleging that the scheme was an “unfair, deceptive, or abusive act or abusive practice” under the Consumer Financial Protection Act (CFPA) [12 U.S.C. §5536(a)(1)(B)]. The district court held that CashCall violated the CFPA.
CashCall appealed alleging that the CFPB was operating under an unconstitutional structure at the time of the enforcement action. The Ninth Circuit, using Seila Law v. CFPB [140 S. Ct. 2183 (2020)], rejected the argument that the CFPB action was unconstitutional because of the unreasonable restriction on the president’s ability to remove. The Ninth Circuit also rejected the claim that the CFPB is unconstitutionally structured in violation of the Appropriations Clause [U.S. Const. Art. 1, §9, Cl. 7].
The Ninth Circuit Court of Appeals also held that the Tribe had no substantial relationship to the transactions, and because there was no other reasonable basis for the parties’ choice of tribal law, the district court correctly declined to give effect to the choice-of-law provision in the loan agreement. The court concluded that from September 2013, the danger that CashCall violated the CFPA was so obvious that CashCall must have been aware of it.
The court vacated the civil penalty and remanded the case to the district court with instructions to reassess.
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