The CFPB Enforcement Authority Upheld in California Court; Yet Recess Appointment Clause Remains Challenged

A little over a year ago, the CFPB filed its first-ever enforcement action. One year later, a California district court judge has denied the defendant's challenge to the authority of the Consumer Financial Protection Bureau ("CFPB") to bring a civil enforcement action against the defendant in federal court. It was a win for the CFPB, and has also opened another big can of worms that the current administration in the White House would rather have seen left alone. On July 17, 2012, in CFPB v. Chance E. Gordon, et al., the agency filed its first civil action against a southern California attorney, his law firm and other defendants that offered loan modification services to consumers. The CFPB charged the defendants with violations of the Consumer Financial Protection Act of 2010 and the Mortgage Assistance Relief Services Rule.