Federal Court Dismisses Credit Reporting Agency’s Counterclaim Against CFPB

The U.S. District Court for the Northern District of Illinois recently dismissed a credit reporting agency’s (CRA’s) counterclaim against the CFPB in which the CRA asserted it was entitled to relief in the amount of a $5 million residual redress payment it previously paid the CFPB under a 2017 Consent Order.

The 2017 Consent Order required the CRA to set aside nearly $14 million to redress affected consumers, $5 million of which was ultimately required to be transferred to the CFPB for distribution to the U.S. Treasury (the “residual redress payment”).  The CFPB now alleges that the CRA violated the 2017 Consent Order’s forward-looking conduct provisions and seeks monetary relief for those alleged violations.

In its counterclaim, the CRA argued that it is entitled to recoup the $5 million residual redress payment and put it toward any judgment the CFPB obtains in this lawsuit for violations that occurred prior to the Consent Order’s effective date.  In the alternative, the CRA asserted a right to a setoff of the same amount.  The CFPB moved to dismiss the counterclaim, stating that, although its complaint references activity occurring prior to the Consent Order’s effective date, it is not seeking relief related to that activity.  The court granted the CFPB’s motion on that basis, dismissing the CRA’s counterclaim.

The court previously denied the CRA’s motion to dismiss the CFPB’s complaint, in which the CRA argued among other things that 1) the CFPB’s failure to respond to its Consent Order Compliance Plan renders the Consent Order unenforceable, and 2) the CFPB’s claims are barred by claim preclusion because they arose from the same set of facts that were at issue in the Consent Order and should have been addressed therein.