On April 21, the United States District Court for the District of Columbia held that the Consumer Financial Protection Bureau exceeded its authority when it issued a Civil Investigative Demand (“CID”) to the Accrediting Council for Independent Colleges and Schools (“ACICS”), an accreditor of for-profit colleges. Notably, this is the first time that the CFPB has had its authority limited by the courts.
The case resulted from the 2015 CID issued by the CFPB to the ACICS to probe whether any ACICS entity violated any federal consumer protection laws when it accredited for-profit colleges. The CID contained numerous demands, including the requirement that the ACICS send a representative to the Bureau to provide oral testimony regarding its accreditation practices and that ACICS identify all post-secondary educational institutions that had been accredited by ACICS since 2010. After generally declining to comply with the CFPB, ACICS petitioned the Bureau to retract the CID. The CFPB filed suit in the district court to enforce the CID, following CFPB Director Richard Cordray’s denial of ACICS’ petition.
In denying its petition, the Court found that the CFPB had no enforcement authority over any laws that involve the for-profit college accreditation process. Moreover, the Court limited the CFPB’s ability to investigate, discarding the CFPB’s argument that it had authority to investigate ACICS’ accreditation activities itself so as to determine if ACICS’ activities were within the CFPB’s jurisdiction. This is the first instance wherein a federal court has limited the Bureau’s jurisdiction and could impact future enforcement by the CFPB.