In August 2017, the Consumer Financial Protection Bureau issued a Civil Investigative Demand (“CID”) to Libre by Nexus, Inc. and Nexus Services, Inc. (collectively, “Nexus”) seeking documents and information to investigate whether the companies were engaging in any unfair or deceptive business practices prohibited by the Consumer Financial Protection Act of 2010. Nexus’ business model is to help immigration detainees post bonds while they wait for immigration hearings. However, as a condition of the bond, Nexus requires recipients to wear a GPS monitoring device for which a monthly fee is charged. The business model and its associated fees have been controversial.
Nexus initially objected to the CFPB’s CID and filed a complaint in the U.S. District Court for the District of Columbia seeking to have it enjoined. The CFPB responded with a petition asking it to be enforced.
The district court referred Nexus and the CFPB to mediation, where they were able to reach an agreement in principle. In a modified CID, agreed to by both parties, the CFPB no longer sought the personal information of Nexus clients who had received help with immigration bonds. The district court entered the parties’ stipulated agreement.
However, a dispute later arose over the terms of the modified CID. In particular, Nexus objected that, as an end run around the parties’ agreement, the CFPB was still seeking from third–party companies the same client information it had agreed not to seek from Nexus in the CID. Nexus filed a motion to enforce the modified CID, contending that the CFPB was acting in bad faith and contrary to the spirit of the parties’ agreement.
The Court agreed with the CFPB that because the modified CID did not expressly preclude the CFPB from seeking information from third parties, it was free to do so. The Court explained that Nexus could have bargained for a total prohibition in the four corners of the CID but did not, so no prohibition existed. The Court further suggested that Nexus might even lack standing to contest any CID issued to a third party.
Thus, companies under investigation by the CFPB should be aware of third–party sources of the same information sought by the CFPB and, if appropriate, expressly include non-disclosure of third–party information as a written term of any agreement.