Rule2024-17539
Consumer Financial Protection Circular 2024-04: Whistleblower Protections Under CFPA Section 1057
Primary source
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Published
August 9, 2024
Issuing agencies
Consumer Financial Protection Bureau
Abstract
The Consumer Financial Protection Bureau (CFPB) has issued Consumer Financial Protection Circular 2024-04, titled, "Whistleblower protections under CFPA section 1057." In this circular, the CFPB responds to the question, "Can requiring employees to sign broad confidentiality agreements violate section 1057 of the Consumer Financial Protection Act (CFPA), the provision protecting the rights of whistleblower employees, and undermine the CFPB's ability to enforce the law?"
Full Text
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<title>Federal Register, Volume 89 Issue 154 (Friday, August 9, 2024)</title>
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[Federal Register Volume 89, Number 154 (Friday, August 9, 2024)]
[Rules and Regulations]
[Pages 65170-65174]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-17539]
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CONSUMER FINANCIAL PROTECTION BUREAU
12 CFR Chapter X
Consumer Financial Protection Circular 2024-04: Whistleblower
Protections Under CFPA Section 1057
AGENCY: Consumer Financial Protection Bureau.
ACTION: Consumer financial protection circular.
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SUMMARY: The Consumer Financial Protection Bureau (CFPB) has issued
Consumer Financial Protection Circular 2024-04, titled, ``Whistleblower
protections under CFPA section 1057.'' In this circular, the CFPB
responds to the question, ``Can requiring employees to sign broad
confidentiality agreements violate section 1057 of the Consumer
Financial Protection Act (CFPA), the provision protecting the rights of
whistleblower employees, and undermine the CFPB's ability to enforce
the law?''
DATES: The CFPB released this circular on its website on July 24, 2024.
ADDRESSES: Enforcers, and the broader public, can provide feedback and
comments to <a href="/cdn-cgi/l/email-protection#cb88a2b9a8bea7aab9b88ba8adbba9e5aca4bd"><span class="__cf_email__" data-cfemail="2162485342544d40535261424751430f464e57">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: George Karithanom, Regulatory
Implementation & Guidance Program Analyst, Office of Regulations, at
202-435-7700 or at: <a href="https://reginquiries.consumerfinance.gov/">https://reginquiries.consumerfinance.gov/</a>. If you
require this document in an alternative electronic format, please
contact <a href="/cdn-cgi/l/email-protection#a6e5e0f6e4f9e7c5c5c3d5d5cfc4cfcacfd2dfe6c5c0d6c488c1c9d0"><span class="__cf_email__" data-cfemail="0e4d485e4c514f6d6d6b7d7d676c6762677a774e6d687e6c20696178">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Question Presented
Can requiring employees to sign broad confidentiality agreements
violate section 1057 of the Consumer Financial Protection Act (CFPA),
the provision protecting the rights of whistleblower employees, and
undermine the CFPB's ability to enforce the law?
Response
Yes. Although confidentiality agreements can be entered into for
legitimate purposes, such as to ensure the protection of confidential
trade secrets, such agreements, depending on how they are worded and
the context in which they are employed, could lead an employee to
reasonably believe that they would be sued or subject to other adverse
actions if they disclosed information related to suspected violations
of Federal consumer financial law to government investigators. Threats
of this nature can lead to violations of section 1057 and impede
investigations into potential wrongdoing, including the CFPB's efforts
to uncover violations of the consumer financial protection laws it
enforces.
Background
Public policy in the United States long has recognized the
important role that whistleblowing plays in preventing and stopping
illegal and unethical
[[Page 65171]]
misconduct. One of the first Federal laws to provide protections to
employees who reported fraud against the government was the False
Claims Act, originally passed in 1863 and since amended. A majority of
States since have passed their own such statutes. As Congress passed
more legislation providing protections for employees against
retaliation from their employers for engaging in protected
whistleblowing activity, it empowered the Occupational Safety and
Health Administration (OSHA), a regulatory agency of the U.S.
Department of Labor (DOL), to adjudicate employees' retaliation claims.
Currently, OSHA's Whistleblower Protection Program enforces the anti-
retaliation provisions of more than 20 Federal laws, including the CFPA
as discussed below.\1\
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\1\ See Occupational Safety and Health Administration:
Whistleblower Protection, <a href="https://www.whistleblowers.gov/about-us">https://www.whistleblowers.gov/about-us</a>.
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Many entities, including covered persons and service providers
under the CFPA,\2\ require their employees to sign nondisclosure
agreements (NDAs) or other types of agreements containing
confidentiality requirements. Such agreements may indicate that
employees who violate the agreement's terms may be subject to lawsuits,
including the possibility of damages or other costs, as well as other
punishment, such as termination. These types of agreements can be
entered into for legitimate purposes--for example, to ensure the
protection of confidential trade secrets or to safeguard the sensitive
personal information of employees or consumers. However, depending on
how they are worded and the context in which they are employed,
confidentiality agreements hold the potential to frustrate the efforts
of government enforcement agencies--including the CFPB--to investigate
violations of law. In particular, confidentiality agreements entered
into in certain circumstances may impede such efforts when they are so
broadly worded as to forbid or otherwise dissuade employees from
reporting suspected violations of law to the government or cooperating
with a government investigation.
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\2\ Covered persons and service providers must comply with the
whistleblower protection requirements of the CFPA. 12 U.S.C.
5481(6), (26); 12 U.S.C. 5567. For simplicity, the remainder of this
circular refers to covered persons and service providers as
``covered persons.''
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CFPA Section 1057
Section 1057 of the CFPA applies to covered persons. It provides
anti-retaliation protections for covered employees \3\ and their
representatives who provide information to the CFPB or any other
Federal, State, or local law enforcement agency regarding potential
violations of laws and rules that are subject to the CFPB's
jurisdiction. Specifically, section 1057(a) provides that ``[n]o
covered person or service provider shall terminate or in any other way
discriminate against, or cause to be terminated or discriminated
against, any covered employee or any authorized representative of
covered employees'' for: (1) providing or being about to provide
information to the employer, the CFPB, or any other State, local, or
Federal Government authority or law enforcement agency relating to a
violation of, or any act or omission that the employee reasonably
believes to be a violation of, a law subject to the CFPB's jurisdiction
or prescribed by the CFPB; (2) testifying or intending to testify about
such a potential violation; (3) objecting to or refusing to participate
in any activity, policy, practice, or assigned task that the employee
reasonably believes to be such a violation; or (4) filing any lawsuit
or instituting any other proceeding under any Federal consumer
financial law.\4\
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\3\ A ``covered employee'' is defined as ``any individual
performing tasks related to the offering or provision of a consumer
financial product or service.'' 12 U.S.C. 5567(b).
\4\ 12 U.S.C. 5567(a).
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Section 1057(c) provides procedures by which a person who believes
they have been discharged or otherwise discriminated against in
violation of section 1057(a) may file a complaint with DOL, and a
process by which DOL shall investigate and adjudicate such
complaints.\5\ It further specifies the procedures for appealing DOL's
decisions in Federal court. The CFPB also has independent authority to
enforce section 1057.\6\ Section 1057(d) provides that, outside of
limited circumstances, contractual provisions that purport to waive the
rights and remedies granted by section 1057 are unenforceable.\7\
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\5\ 12 U.S.C. 5567(c).
\6\ 12 U.S.C. 5563(a)(1), 5564(a).
\7\ 12 U.S.C. 5567(d). This provision applies to pre-dispute
arbitration agreements, which it states are not valid or enforceable
to the extent they require arbitration of disputes arising under
section 1057. 12 U.S.C. 5567(d)(2).
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Accordingly, section 1057 makes it unlawful for a covered person to
discriminate against an employee for whistleblowing with respect to
suspected violations of Federal consumer financial law. As explained
below, discrimination in this sense may include suing or threatening to
sue or otherwise taking or threatening to take adverse action against
employees for engaging in whistleblowing activity. And, in certain
circumstances, requiring employees to sign confidentiality agreements
that are so broad as to forbid or otherwise dissuade employees from
sharing information about potential law violations with the government
or cooperating with a government investigation can amount to a threat
to punish.
Analysis
The CFPB is issuing this circular to remind regulators and the
public that covered persons who in certain circumstances require their
employees to enter into broad confidentiality agreements that do not
clearly permit communications with government enforcement agencies or
cooperation with law enforcement investigations risk violating the
CFPA's prohibition on discrimination against whistleblowers and
undermining the government's ability to enforce the law.
As noted above, section 1057(a) prohibits covered persons from
terminating or otherwise discriminating against covered employees for
engaging in whistleblowing activity. The term ``discriminate against''
is broad and encompasses a variety of adverse actions that a covered
person may take against covered employees.\8\ The use of the term in
multiple whistleblower protection statutes passed by Congress reflects
this understanding.
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\8\ At its essence, to ``discriminate'' means ``to make a
distinction'' or ``to make a difference in treatment or favor on a
basis other than individual merit.'' Discriminate, <a href="http://Merriam-Webster.com">Merriam-Webster.com</a>, <a href="https://www.merriam-webster.com/dictionary/discriminate">https://www.merriam-webster.com/dictionary/discriminate</a>
(last visited July 17, 2024); see also Murray v. UBS Securities,
LLC, 601 U.S. 23, 34 (2024) (explaining meaning of ``discriminate''
under analogous anti-retaliation provision in the Sarbanes-Oxley
Act, 18 U.S.C. 1514A, and holding that while the employee had to
prove his protected activity was a contributing factor in the
unfavorable personnel action, he did not also have to prove his
employer acted with retaliatory intent).
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For example, section 23 of the Commodity Exchange Act (CEA), which
Congress passed as part of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (DFA, of which the CFPA is a part), created a
whistleblower awards program and protection for whistleblowers.\9\
Section 23, which is administered by the Commodity Futures Trading
Commission (CFTC), states ``[n]o employer may discharge, demote,
suspend, threaten, harass, directly or indirectly, or in any other
manner discriminate against, a whistleblower in the terms and
conditions of employment because of any lawful act done by the
whistleblower'' in providing
[[Page 65172]]
information to the CFTC.\10\ Likewise, Congress created a whistleblower
awards program and related protections when it passed section 21F of
the Securities Exchange Act of 1934, also part of the DFA. Section 21F,
which is administered by the Securities and Exchange Commission (SEC),
identically provides that ``[n]o employer may discharge, demote,
suspend, threaten, harass, directly or indirectly, or in any other
manner discriminate against, a whistleblower in the terms and
conditions of employment because of any lawful act done by the
whistleblower'' in providing information to the SEC.\11\ Congress thus
made clear that the term ``discriminate against'' encompasses a variety
of adverse actions--including threatening employees--listed in these
statutes, in addition to other actions that employers may take to
prevent or dissuade employees from whistleblowing or to punish them for
whistleblowing.\12\
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\9\ 7 U.S.C. 26. See Commodity Futures Trading Commission:
Whistleblower Protections, <a href="https://www.whistleblower.gov/protections">https://www.whistleblower.gov/protections</a>.
\10\ 7 U.S.C. 26(h)(1)(A) (emphasis added).
\11\ 15 U.S.C. 78u-6(h)(1)(A) (emphasis added).
\12\ In addition to these examples, the Financial Institutions
Anti-Fraud Enforcement Act of 1990 (FIAFEA) allows whistleblowers to
bring claims related to suspected violations of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(FIRREA)--passed in the wake of the savings and loan crisis--by
submitting confidential declarations setting forth facts about
alleged fraud. 12 U.S.C. 4201 et seq. As enacted, in addition to
providing for discretionary monetary awards from the Attorney
General, the FIAFEA granted certain protections to whistleblowers
against employer retaliation for lawfully reporting such information
to the government. 12 U.S.C. 4212 (providing that such declarants
shall enjoy the protections afforded under 18 U.S.C. 3059A(e)).
Specifically, it provided that a person who ``is discharged,
demoted, suspended, threatened, harassed, or in any other manner
discriminated against in the terms or conditions of employment by an
employer because of lawful acts done by the person . . . in
furtherance of a prosecution under [applicable provisions] may, in a
civil action, obtain all relief necessary to make the person
whole.'' 18 U.S.C. 3059A(e)(1), repealed by Public Law 107-273, 116
Stat. 1781 (Nov. 2, 2002) (emphasis added). Congress repealed 18
U.S.C. 3059A in 2002 as it considered it to be one of several
``redundant authorizations of payments for rewards.'' Public Law
107-273, 116 Stat. 1781 (Nov. 2, 2002). Functionally equivalent
award and anti-retaliation provisions apply to employees of insured
depository institutions and credit unions pursuant to the Federal
Deposit Insurance Corporation Act and Federal Credit Union Act,
although those provisions do not contain the same list of examples
of forms of employer discrimination that appeared in the FIAFEA. See
12 U.S.C. 1831j, 1831k; 12 U.S.C. 1790b, 1790c. These provisions
predated the FIAFEA, however, and the fact that Congress labeled the
FIAFEA protections ``redundant'' supports the notion that it viewed
the less descriptive anti-discrimination provisions in these acts as
encompassing the broad definition of discrimination articulated in
the FIAFEA.
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In addition to enforcing the anti-retaliation provision of section
21F, the SEC promulgated Rule 21F-17, which provides that ``[n]o person
may take any action to impede an individual from communicating directly
with the Commission staff about a possible securities law violation,
including enforcing, or threatening to enforce, a confidentiality
agreement . . . with respect to such communications.'' \13\ As the SEC
explained in its proposal, ``the Congressional purpose underlying
section 21F of the Exchange Act is to encourage whistleblowers to
report potential violations of the securities laws by providing
financial incentives, prohibiting employment-related retaliation, and
providing various confidentiality guarantees. Efforts to impede a
whistleblower's direct communications with Commission staff about a
potential securities law violation, however, would appear to conflict
with this purpose.'' \14\ The SEC since has pursued enforcement actions
against companies that it alleged violated Rule 21F-17 by requiring
their employees or clients to sign confidentiality agreements that
would impede the ability of such individuals to share freely
information about suspected wrongdoing with the SEC.\15\
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\13\ 17 CFR 240.21F-17(a).
\14\ 75 FR 70488, 70510 (Nov. 17, 2010). See also 76 FR 34300,
34351-52 (June 13, 2011) (final rule preamble reiterating
congressional purpose).
\15\ See, e.g., Press Release, SEC, SEC: Companies Cannot Stifle
Whistleblowers in Confidentiality Agreements (Apr. 1, 2015), <a href="https://www.sec.gov/news/press-release/2015-54">https://www.sec.gov/news/press-release/2015-54</a> (describing administrative
settlement in enforcement action wherein SEC alleged that KBR Inc.'s
practice requiring employees to sign confidentiality agreements in
internal investigations created a ``chilling effect'' to discourage
whistleblowing in violation of Rule 21F-17); Press Release, SEC,
Company Paying Penalty for Violating Key Whistleblower Protection
Rule (Aug. 10, 2016), <a href="https://www.sec.gov/news/press-release/2016-157">https://www.sec.gov/news/press-release/2016-157</a> (describing SEC's issuance of cease-and-desist order and
imposition of remedial sanctions against publicly traded company
BlueLinx Holdings, Inc. for including language in its employee
severance agreements that required departing employees to notify the
company's legal department prior to disclosing any financial or
business information to any third parties); Press Release, SEC, J.P.
Morgan to Pay $18 Million for Violating Whistleblower Protection
Rule (Jan. 16, 2024), <a href="https://www.sec.gov/news/press-release/2024-7">https://www.sec.gov/news/press-release/2024-7</a>
(announcing settled charges against J.P. Morgan Securities LLC for
violations of Rule 21F-17(a) stemming from the company's regularly
asking retail clients to sign confidential release agreements that
allowed them to respond to SEC inquiries but did not permit them to
voluntarily contact the SEC).
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The SEC is not alone in observing that employer confidentiality
agreements may undermine the rights of whistleblowers and impede
government enforcement efforts. In 2017, the CFTC promulgated a rule
that similarly bars impeding an individual from communicating with CFTC
staff, including by enforcing or threatening to enforce confidentiality
agreements.\16\ The CFTC explained when it proposed the rule that it
was doing so to complement the prohibition on employer retaliation
against whistleblowers found in CEA section 23(h)(1)(A) and to achieve
consistency with the SEC's whistleblower rules.\17\ In June 2024, the
CFTC issued a settlement order with Trafigura Trading LLC that
addressed, among other issues, the company's NDAs with employees that
impeded their ability to communicate voluntarily with the CFTC.\18\ And
last year, the Federal Trade Commission's (FTC's) Bureau of Competition
issued guidance explaining that certain types of contractual
provisions, including confidentiality agreements, NDAs, and notice-of-
agency-contact provisions, are ``contrary to public policy and
therefore void and unenforceable insofar as they purport to (1)
prevent, limit, or otherwise hinder a contract party from speaking
freely with the FTC; or (2) require a contract party to disclose
anything to an investigation target about the FTC's outreach or
communications.'' \19\
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\16\ 17 CFR 165.19(b).
\17\ 81 FR 55951, 55955 (Aug. 30, 2016).
\18\ In re Trafigura Trading LLC, CFTC No. 24-08, 2024 WL
3225331 (June 17, 2024), available at <a href="https://www.cftc.gov/media/10791/enftrafiguratradingorder061724/download">https://www.cftc.gov/media/10791/enftrafiguratradingorder061724/download</a>.
\19\ Bureau of Competition, FTC, Re: Contracts That Impede
Bureau of Competition Investigations (June 15, 2023), available at
<a href="https://www.ftc.gov/system/files/ftc_gov/pdf/Formal-Analysis.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/Formal-Analysis.pdf</a>.
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The same dynamic is true for the CFPB. Confidentiality agreements
that limit the ability of employees to communicate with government
enforcement agencies or speak freely with investigators undermine the
CFPB's ability to enforce the law. Among the functions that Congress
laid out for the CFPB is ``taking appropriate enforcement action to
address violations of Federal consumer financial law.'' \20\ Subtitle E
of the CFPA specifies the CFPB's enforcement powers, including the
authority to conduct investigations of potential violations of law.\21\
In addition to other actions, the CFPB may issue demands for written or
oral testimony in pursuing such investigations.\22\ If, due to a
confidentiality agreement, an employee perceives that they could suffer
adverse consequences for cooperating in such circumstances, then the
CFPB's ability to carry out its statutory functions to protect
consumers is compromised.
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\20\ 12 U.S.C. 5511(c)(4).
\21\ See 12 U.S.C. 5562.
\22\ See 12 U.S.C. 5562(c)(1).
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Consistent with these observations, covered persons that require
employees in certain circumstances to sign broadly worded
confidentiality agreements risk violating section 1057 of the CFPA.
[[Page 65173]]
Confidentiality agreements sometimes specify that the employer may file
a lawsuit or reserves the right to take adverse employment action upon
the employee's violation of the agreement. Depending on the
circumstances, an employee may interpret such conditions as threats to
retaliate for engaging in whistleblowing activity. The risk of a
violation of section 1057 is heightened when covered persons impose
such agreements in situations that are particularly likely to lead a
reasonable employee to perceive the required entry into the agreement
as a threat, such as in the context of an internal investigation or
other scenario involving potential violations of law--for example,
after the uncovering of suspected or confirmed wrongdoing, or in the
aftermath of a potentially embarrassing episode for a company. When an
employee participates in an investigation or otherwise is made aware of
possible wrongdoing and simultaneously is required to sign such an
agreement, there is a heightened risk that the employee reasonably
would view the requirement to sign as a threat by the employer to take
adverse action if the employee were to engage in whistleblowing
activity. Indeed, the employee reasonably may not fathom any other
reason for why they are being made to sign the agreement beyond that
the employer is threatening to sue or otherwise punish the employee for
engaging in whistleblowing. In line with the analysis above, such
threats may constitute discrimination within the meaning of section
1057 and thus be prohibited, regardless of whether or not the employer
acts upon them or a court actually would enforce a confidentiality
agreement with respect to whistleblowing.\23\
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\23\ As noted above, section 1057(d) of the CFPA renders
unenforceable ``any agreement, policy, form, or condition of
employment'' that purports to waive the rights and remedies provided
for in section 1057. 12 U.S.C. 5567(d)(1). And, the CFPB has
explained that including unenforceable terms in a consumer contract
may constitute a deceptive act or practice in violation of the
CFPA's prohibition on unfair, deceptive, or abusive acts or
practices. See CFPB, Consumer Financial Protection Circular 2024-03:
Unlawful and unenforceable contract terms and conditions (June 4,
2024), <a href="https://www.consumerfinance.gov/compliance/circulars/consumer-financial-protection-circular-2024-03/">https://www.consumerfinance.gov/compliance/circulars/consumer-financial-protection-circular-2024-03/</a>. Similarly,
requiring employees to enter into overly broad confidentiality
agreements that restrict or waive the employees' whistleblower
rights could constitute a deceptive act or practice in appropriate
circumstances. Although the CFPB typically has found deceptive acts
or practices with respect to misrepresentations made to a consumer,
deceptive acts or practices targeting other parties--such as a
covered person's employees--may also violate the CFPA if the
deception is in connection with the offering or provision of
consumer financial products or services. See 12 U.S.C. 5531, 5536.
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For example, in 2015, the SEC found that Houston-based global
technology and engineering firm KBR Inc. violated Rule 21F-17 by
requiring witnesses in certain internal investigations to sign
confidentiality agreements containing language warning they could face
discipline, including possible termination, if they discussed the
matters with outside parties without the prior approval of the
company's legal department.\24\ The SEC's order stated that, although
there were no apparent instances in which the company specifically
prevented employees from communicating with the SEC about securities
law violations, the company's blanket prohibition against witnesses
discussing the substance of their interviews without prior approval
under penalty of disciplinary action had a chilling effect that
undermined the purpose of section 21F and Rule 21F-17, which is to
encourage whistleblowers to report illegal conduct to the SEC. The
company agreed as part of the settlement to amend its confidentiality
statement to add language making clear that employees are free to
report possible violations to the SEC and other Federal agencies
without KBR approval or fear of retaliation.
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\24\ Supra n.15.
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Confidentiality agreements that risk leading to violations of
whistleblower protection statutes--including section 1057 of the CFPA--
can be formulated in different ways. Certainly, employers can draft
them in an express manner that purports to forbid the sharing of
information with outside parties with no acknowledgment of and
exception for the exercise of whistleblower rights. The risk of a
reasonable employee interpreting their required entry into such an
agreement in circumstances involving potential wrongdoing as a threat
against reporting information to the government is relatively high. But
other confidentiality agreements that undermine whistleblower
protections may reasonably be perceived by employees as threats against
them for exercising their rights in such circumstances. For example, an
agreement that forbids sharing information with third parties ``to the
extent permitted by law'' may technically permit whistleblowing.
However, an employee, who may not know that the law forbids
restrictions on whistleblowing but understands that the consequence of
violating the agreement is suffering adverse employment action, may
reasonably interpret the agreement to bar providing information to a
law enforcement agency or voluntarily cooperating in a government
investigation depending on the circumstances in which the employer asks
the employee to enter into the agreement. An employee reasonably may
feel threatened by such language in certain circumstances, such as
those described above, and decline to report suspected violations of
law to the government.\25\ An employer can significantly reduce the
risk of this kind of perception--and thus of violating section 1057--by
ensuring that its agreements expressly permit employees to communicate
freely with government enforcement agencies and to cooperate in
government investigations.
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\25\ In a recently filed complaint, DOL explained how
confidentiality provisions in employment agreements that require
employees not to share the terms of the agreement except with the
employee's immediate family or attorney or ``as required by law''
could cause employees to ``reasonably believe that they cannot
disclose the terms of the agreements to [DOL] absent a subpoena or
court order,'' and that these provisions, along with broad non-
disparagement and non-disclosure provisions coupled with the threat
of termination and monetary damages, dissuade employees from
speaking freely with DOL investigators in violation of section
15(a)(3) of the Fair Labor Standards Act, 29 U.S.C. 215(a)(3).
Complaint, ]] 95-106, 129-38, 160-65, Su v. Smoothstack, Inc., No.
1:24-cv-04789 (E.D.N.Y. July 10, 2024), available at <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/2024/07/SmoothstackInc-Complaint-24-1337-NAT.pdf">https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/2024/07/SmoothstackInc-Complaint-24-1337-NAT.pdf</a>.
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As explained above, suing or threatening to sue or otherwise punish
employees for engaging in whistleblowing activity may constitute
discrimination against whistleblowers. Accordingly, when covered
persons require employees to sign broadly worded confidentiality
agreements that do not clearly permit communicating with government
enforcement agencies or cooperating with law enforcement, especially
when circumstances bear indicia of potential or suspected wrongdoing,
they may be threatening to take adverse action against those employees
for reporting suspected violations of Federal consumer financial law to
the CFPB or other regulators. Thus, covered persons who impose these
types of agreements on their employees risk violating the prohibition
on discrimination against whistleblowers contained in section 1057 of
the CFPA.
About Consumer Financial Protection Circulars
Consumer Financial Protection Circulars are issued to all parties
with authority to enforce Federal consumer financial law. The CFPB is
the principal Federal regulator responsible for administering Federal
consumer financial law, see 12 U.S.C. 5511, including the Consumer
Financial
[[Page 65174]]
Protection Act's prohibition on unfair, deceptive, and abusive acts or
practices, 12 U.S.C. 5536(a)(1)(B), and 18 other ``enumerated consumer
laws,'' 12 U.S.C. 5481(12). However, these laws are also enforced by
State attorneys general and State regulators, 12 U.S.C. 5552, and
prudential regulators including the Federal Deposit Insurance
Corporation, the Office of the Comptroller of the Currency, the Board
of Governors of the Federal Reserve System, and the National Credit
Union Administration. See, e.g., 12 U.S.C. 5516(d), 5581(c)(2)
(exclusive enforcement authority for banks and credit unions with $10
billion or less in assets). Some Federal consumer financial laws are
also enforceable by other Federal agencies, including the Department of
Justice and the Federal Trade Commission, the Farm Credit
Administration, the Department of Transportation, and the Department of
Agriculture. In addition, some of these laws provide for private
enforcement.
Consumer Financial Protection Circulars are intended to promote
consistency in approach across the various enforcement agencies and
parties, pursuant to the CFPB's statutory objective to ensure Federal
consumer financial law is enforced consistently. 12 U.S.C. 5511(b)(4).
Consumer Financial Protection Circulars are also intended to
provide transparency to partner agencies regarding the CFPB's intended
approach when cooperating in enforcement actions. See, e.g., 12 U.S.C.
5552(b) (consultation with CFPB by State attorneys general and
regulators); 12 U.S.C. 5562(a) (joint investigatory work between CFPB
and other agencies).
Consumer Financial Protection Circulars are general statements of
policy under the Administrative Procedure Act. 5 U.S.C. 553(b). They
provide background information about applicable law, articulate
considerations relevant to the Bureau's exercise of its authorities,
and, in the interest of maintaining consistency, advise other parties
with authority to enforce Federal consumer financial law. They do not
restrict the Bureau's exercise of its authorities, impose any legal
requirements on external parties, or create or confer any rights on
external parties that could be enforceable in any administrative or
civil proceeding. The CFPB Director is instructing CFPB staff as
described herein, and the CFPB will then make final decisions on
individual matters based on an assessment of the factual record,
applicable law, and factors relevant to prosecutorial discretion.
Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2024-17539 Filed 8-8-24; 8:45 am]
BILLING CODE 4810-AM-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on August 9, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.