CFPB publishes enforcement guide for Small Business Data Rule


The CFPB has issued guidance for how the agency plans to enforce its final rule implementing Section 1071 of the Dodd-Frank Act, which requires the collection and reporting of credit application data for small businesses, including women-owned and minority-owned small businesses.

In a statement, the CFPB said it intends to pay particular attention to covered lenders' response rates for data requested from applicants. The agency also will consider how a lender's response rates compare to financial institutions of a similar size, type, geographic reach or other relevant factors, “because, as noted in the rule, low response rates may indicate discouragement or other failure by that lender to maintain proper collection procedures consistent with the rule.” In addition, the agency will consider, among other things, irregularities in a particular response—for example, very high rates of an applicant response of “I do not wish to provide this information”—because “that may indicate steering, improper interference, or other potential discouragement or obstruction of applicants' preferred responses.”

Last month, a lawsuit was filed by the Texas Bankers Association and McAllen, Texas-based Rio Bank challenging the CFPB’s final rule. The plaintiffs contend that the agency’s actions go well beyond the 13 data points specified in the Dodd-Frank Act to impose a final rule that “requires banks to develop and implement new software and compliance mechanisms to address over 80 reporting requirements that have been exponentially grown by the CFPB since the act requiring this rule was passed.” They also contend the significant reporting requirements will force some community banks out of small-business lending altogether. The future of this final rule all depends on the outcome of this lawsuit.

Read the CFPB statement on enforcement of the rule.