Consumer Financial Protection Bureau Final Rule

2024-00456: Civil Penalty Inflation Adjustments

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Summary

The Consumer Financial Protection Bureau (CFPB) is adjusting for inflation the maximum amount of each civil penalty within the CFPB's jurisdiction. These adjustments are required by the Federal Civil Penalties Inflation Adjustment Act of 1990 (Inflation Adjustment Act), as amended by the Debt Collection Improvement Act of 1996 and further amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The inflation adjustments mandated by the Inflation Adjustment Act serve to maintain the deterrent effect of civil penalties and to promote compliance with the law.

The agency’s own summary, as published.

The rule, in full

2,175 words as published, January 11, 2024. View the original →

Federal Register, Volume 89 Issue 8 (Thursday, January 11, 2024) [Federal Register Volume 89, Number 8 (Thursday, January 11, 2024)] [Rules and Regulations] [Pages 1787-1789] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 2024-00456] ======================================================================== Rules and Regulations Federal Register ________________________________________________________________________ This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. ======================================================================== Federal Register / Vol. 89, No. 8 / Thursday, January 11, 2024 / Rules and Regulations [[Page 1787]] CONSUMER FINANCIAL PROTECTION BUREAU 12 CFR Part 1083 Civil Penalty Inflation Adjustments

Agency

Consumer Financial Protection Bureau.

Action

Final rule. -----------------------------------------------------------------------

Summary

Dates

This final rule is effective January 15, 2024.

For Further Information Contact

Anna Boadwee and Adrien Fernandez, Attorney-Advisors, Office of Regulations, at (202) 435-7700. If you require this document in an alternative electronic format, please contact [email protected].

Supplementary Information

I. Background

The Inflation Adjustment Act,\1\ as amended by the Debt Collection Improvement Act of 1996 \2\ and further amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015,\3\ directs Federal agencies to adjust the civil penalty amounts within their jurisdictions for inflation not later than July 1, 2016, and then not later than January 15 every year thereafter.\4\ Each agency was required to make the 2016 one-time catch-up adjustments through an interim final rule published in the Federal Register. On June 14, 2016, the CFPB published its interim final rule (IFR) to make the initial catch-up adjustments to civil penalties within the CFPB's jurisdiction.\5\ The June 2016 IFR created a new part 1083 and in Sec. 1083.1 established the inflation-adjusted maximum amounts for each civil penalty within the CFPB's jurisdiction.\6\ The CFPB finalized the IFR on January 31, 2019.\7\ --------------------------------------------------------------------------- \1\ Public Law 101-410, 104 Stat. 890. \2\ Public Law 104-134, sec. 31001(s)(1), 110 Stat. 1321, 1321- 373. \3\ Public Law 114-74, sec. 701, 129 Stat. 584, 599. \4\ Section 1301(a) of the Federal Reports Elimination Act of 1998, Public Law 105-362, 112 Stat. 3293, also amended the Inflation Adjustment Act by striking section 6, which contained annual reporting requirements, and redesignating section 7 as section 6, but did not alter the civil penalty adjustment requirements; 28 U.S.C. 2461 note. \5\ 81 FR 38569 (June 14, 2016). Although the CFPB was not obligated to solicit comment for the interim final rule, the CFPB invited public comment and received none. \6\ See 12 CFR 1083.1. \7\ 84 FR 517 (Jan. 31, 2019). --------------------------------------------------------------------------- The Inflation Adjustment Act also requires subsequent adjustments to be made annually, not later than January 15, and notwithstanding section 553 of the Administrative Procedure Act (APA).\8\ The CFPB annually adjusted its civil penalty amounts, as required by the Act.\9\ --------------------------------------------------------------------------- \8\ Inflation Adjustment Act section 4, codified at 28 U.S.C. 2461 note. As discussed in guidance issued by the Director of the Office of Management and Budget (OMB), the APA generally requires notice, an opportunity for comment, and a delay in effective date for certain rulemakings, but the Inflation Adjustment Act provides that these procedures are not required for agencies to issue regulations implementing the annual adjustment. See Memorandum for the Heads of Exec. Dep'ts & Agencies from Shalanda D. Young, Director, Implementation of Penalty Inflation Adjustments for 2023, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Off. of Mgmt. & Budget (Dec. 19, 2023), available at https://www.whitehouse.gov/wp-content/uploads/2023/12/M-24-07-Implementation-of-Penalty-Inflation-Adjustments-for-2024.pdf. \9\ See 82 FR 3601 (Jan. 12, 2017); 83 FR 1525 (Jan. 12, 2018); 84 FR 517 (Jan. 31, 2019); 85 FR 2012 (Jan. 14, 2020); 86 FR 3767 (Jan. 15, 2021); 87 FR 2314 (Jan. 14, 2022); 88 FR 1 (Jan. 3, 2023). --------------------------------------------------------------------------- Specifically, the Inflation Adjustment Act directs Federal agencies to adjust annually each civil penalty provided by law within the jurisdiction of each agency by the ``cost-of-living adjustment.'' \10\ The ``cost-of-living adjustment'' is defined as the percentage (if any) by which the Consumer Price Index for All Urban Consumers (CPI-U) for the month of October preceding the date of the adjustment, exceeds the CPI-U for October of the prior year.\11\ The Director of the Office of Management and Budget (OMB) is required to issue guidance (OMB Guidance) every year by December 15 to agencies on implementing the annual civil penalty inflation adjustments. Pursuant to the Inflation Adjustment Act and OMB Guidance, agencies must apply the multiplier reflecting the ``cost-of-living adjustment'' to the current penalty amount and then round that amount to the nearest dollar to determine the annual adjustments.\12\ The adjustments are designed to keep pace with inflation so that civil penalties retain their deterrent effect and promote compliance with the law.\13\ --------------------------------------------------------------------------- \10\ Inflation Adjustment Act sections 4 and 5, codified at 28 U.S.C. 2461 note. \11\ Inflation Adjustment Act sections 3 and 5, codified at 28 U.S.C. 2461 note. \12\ Inflation Adjustment Act section 5, codified at 28 U.S.C. 2461 note; see also Memorandum for the Heads of Exec. Dep'ts & Agencies from Shalanda D. Young, Director, Implementation of Penalty Inflation Adjustments for 2023, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Off. of Mgmt. & Budget (Dec. 19, 2023), available at https://www.whitehouse.gov/wp-content/uploads/2023/12/M-24-07-Implementation-of-Penalty-Inflation-Adjustments-for-2024.pdf. \13\ See Inflation Adjustment Act section 2, codified at 28 U.S.C. 2461 note. --------------------------------------------------------------------------- For the 2024 annual adjustment, the multiplier reflecting the ``cost-of-living adjustment'' is 1.03241.

II. Adjustment

Pursuant to the Inflation Adjustment Act and OMB Guidance, the CFPB multiplied each of its civil penalty amounts by the ``cost-of-living adjustment'' multiplier and rounded to the nearest dollar.\14\ The new penalty amounts that apply to civil penalties assessed after January 15, 2024 are as follows: --------------------------------------------------------------------------- \14\ Inflation Adjustment Act section 4, codified at 28 U.S.C. 2461 note. [[Page 1788]] -------------------------------------------------------------------------------------------------------------------------------------------------------- Penalty amounts OMB ``cost-of- Law Penalty description established living New penalty under 2023 adjustment'' amount \15\ final rule multiplier -------------------------------------------------------------------------------------------------------------------------------------------------------- Consumer Financial Protection Act, 12 U.S.C. Tier 1 penalty.............................................. $6,813 1.03241 $7,034 5565(c)(2)(A). Consumer Financial Protection Act, 12 U.S.C. Tier 2 penalty.............................................. 34,065 1.03241 35,169 5565(c)(2)(B). Consumer Financial Protection Act, 12 U.S.C. Tier 3 penalty.............................................. 1,362,567 1.03241 1,406,728 5565(c)(2)(C). Interstate Land Sales Full Disclosure Act, Per violation............................................... 2,374 1.03241 2,451 15 U.S.C. 1717a(a)(2). Interstate Land Sales Full Disclosure Act, Annual cap.................................................. 2,372,677 1.03241 2,449,575 15 U.S.C. 1717a(a)(2). Real Estate Settlement Procedures Act, 12 Per failure................................................. 111 1.03241 115 U.S.C. 2609(d)(1). Real Estate Settlement Procedures Act, 12 Annual cap.................................................. 223,229 1.03241 230,464 U.S.C. 2609(d)(1). Real Estate Settlement Procedures Act, 12 Per failure, where intentional.............................. 223 1.03241 230 U.S.C. 2609(d)(2)(A). SAFE Act, 12 U.S.C. 5113(d)(2).............. Per violation............................................... 34,401 1.03241 35,516 Truth in Lending Act, 15 U.S.C. 1639e(k)(1). First violation............................................. 13,627 1.03241 14,069 Truth in Lending Act, 15 U.S.C. 1639e(k)(2). Subsequent violations....................................... 27,252 1.03241 28,135 --------------------------------------------------------------------------------------------------------------------------------------------------------

A. Administrative Procedure Act

Under the APA, notice and opportunity for public comment are not required if the CFPB finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest.\16\ The adjustments to the civil penalty amounts are technical and non- discretionary, and they merely apply the statutory method for adjusting civil penalty amounts. These adjustments are required by the Inflation Adjustment Act. Moreover, the Inflation Adjustment Act directs agencies to adjust civil penalties annually notwithstanding section 553 of the APA,\17\ and OMB Guidance reaffirms that agencies need not complete a notice-and-comment process before making the annual adjustments for inflation.\18\ For these reasons, the CFPB has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. The amendments therefore are adopted in final form. --------------------------------------------------------------------------- \15\ Numbers may not multiply to totals shown because of rounding. \16\ 5 U.S.C. 553(b)(B). \17\ Inflation Adjustment Act section 4, codified at 28 U.S.C. 2461 note. \18\ Memorandum for the Heads of Exec. Dep'ts & Agencies from Shalanda D. Young, Director, Implementation of Penalty Inflation Adjustments for 2023, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Off. of Mgmt. & Budget (Dec. 19, 2023), available at https://www.whitehouse.gov/wp-content/uploads/2023/12/M-24-07-Implementation-of-Penalty-Inflation-Adjustments-for-2024.pdf. --------------------------------------------------------------------------- Section 553(d) of the APA generally requires publication of a final rule not less than 30 days before its effective date, except (1) a substantive rule which grants or recognizes an exemption or relieves a restriction; (2) interpretive rules and statements of policy; or (3) as otherwise provided by the agency for good cause found and published with the rule.\19\ At minimum, the CFPB believes the annual adjustments to the civil penalty amounts in Sec. 1083.1(a) fall under the third exception to section 553(d). The CFPB finds that there is good cause to make the amendments effective on January 15, 2024. The amendments to Sec. 1083.1(a) in this final rule are technical and non-discretionary, and they merely apply the statutory method for adjusting civil penalty amounts and follow the statutory directive to make annual adjustments each year. Moreover, the Inflation Adjustment Act directs agencies to adjust the civil penalties annually notwithstanding section 553 of the APA,\20\ and OMB Guidance reaffirms that agencies need not provide a delay in effective date for the annual adjustments for inflation.\21\ --------------------------------------------------------------------------- \19\ 5 U.S.C. 553(d). \20\ Inflation Adjustment Act section 4, codified at 28 U.S.C. 2461 note. \21\ Memorandum for the Heads of Exec. Dep'ts & Agencies from Shalanda D. Young, Director, Implementation of Penalty Inflation Adjustments for 2023, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Off. of Mgmt. & Budget (Dec. 19, 2023), available at https://www.whitehouse.gov/wp-content/uploads/2023/12/M-24-07-Implementation-of-Penalty-Inflation-Adjustments-for-2024.pdf. ---------------------------------------------------------------------------

B. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) does not apply to a rulemaking where a general notice of proposed rulemaking is not required.\22\ As noted previously, the CFPB has determined that it is unnecessary to publish a general notice of proposed rulemaking for this final rule. Accordingly, the RFA's requirements relating to an initial and final regulatory flexibility analysis do not apply. --------------------------------------------------------------------------- \22\ 5 U.S.C. 603(a), 604(a). ---------------------------------------------------------------------------

C. Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995,\23\ the CFPB reviewed this final rule. The CFPB has determined that this rule does not create any new information collections or substantially revise any existing collections. --------------------------------------------------------------------------- \23\ 44 U.S.C. 3506; 5 CFR part 1320. ---------------------------------------------------------------------------

D. Congressional Review Act

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), the CFPB will submit a report containing this rule and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the United States prior to the rule taking effect. The Office of Information and Regulatory Affairs (OIRA) has designated this rule as not a ``major rule'' as defined by 5 U.S.C. 804(2). List of Subjects in 12 CFR Part 1083 Administrative practice and procedure, Consumer protection, Penalties. Authority and Issuance For the reasons set forth in the preamble, the CFPB amends 12 CFR part 1083 as set forth below: [[Page 1789]] PART 1083--CIVIL PENALTY ADJUSTMENTS 0

1. The authority citation for part 1083 continues to read as follows:

Authority: 12 U.S.C. 2609(d); 12 U.S.C. 5113(d)(2); 12 U.S.C. 5565(c); 15 U.S.C. 1639e(k); 15 U.S.C. 1717a(a); 28 U.S.C. 2461 note. 0

2. Section 1083.1 is revised to read as follows:

Sec. 1083.1 Adjustment of civil penalty amounts. (a) The maximum amount of each civil penalty within the jurisdiction of the Consumer Financial Protection Bureau to impose is adjusted in accordance with the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996 and further amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (28 U.S.C. 2461 note), as follows: Table 1 to Paragraph (a) ------------------------------------------------------------------------ Adjusted maximum Law Penalty description civil penalty amount ------------------------------------------------------------------------ 12 U.S.C. 5565(c)(2)(A).......... Tier 1 penalty..... $7,034 12 U.S.C. 5565(c)(2)(B).......... Tier 2 penalty..... 35,169 12 U.S.C. 5565(c)(2)(C).......... Tier 3 penalty..... 1,406,728 15 U.S.C. 1717a(a)(2)............ Per violation...... 2,451 15 U.S.C. 1717a(a)(2)............ Annual cap......... 2,449,575 12 U.S.C. 2609(d)(1)............. Per failure........ 115 12 U.S.C. 2609(d)(1)............. Annual cap......... 230,464 12 U.S.C. 2609(d)(2)(A).......... Per failure, where 230 intentional. 12 U.S.C. 5113(d)(2)............. Per violation...... 35,516 15 U.S.C. 1639e(k)(1)............ First violation.... 14,069 15 U.S.C. 1639e(k)(2)............ Subsequent 28,135 violations. ------------------------------------------------------------------------ (b) The adjustments in paragraph (a) of this section shall apply to civil penalties assessed after January 15, 2024, whose associated violations occurred on or after November 2, 2015. Brian Shearer, Senior Advisor, Consumer Financial Protection Bureau. [FR Doc. 2024-00456 Filed 1-10-24; 8:45 am] BILLING CODE 4810-AM-P

What this changes

Amends 1 part of the Code of Federal Regulations — the standing rules this notice rewrites.

12 CFR 1083 Civil Penalty Adjustments

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