D.C. Federal Court Denies CFPB’s Authority to Issue Investigative Demand to For-Profit College Accreditor

The United States District Court for the District of Columbia recently held that the Consumer Financial Protection Bureau (“CFPB”) lacked the authority to investigate an entity’s process for accrediting for-profit schools.  See Consumer Financial Protection Bureau v. Accrediting Council for Independent Colleges and Schools, 15-1838 (RJL) (D.D.C. Apr. 21, 2016).  In the case, the CFPB served a civil investigative demand on the Accrediting Council for Independent Colleges and Schools (“ACICS”) in which it demanded information relating to “whether any entity or person has engaged or is engaging in unlawful acts and practices in connection with accrediting for-profit colleges.”  After ACICS refused to comply, the CFPB filed a petition for enforcement.  ACICS opposed the petition, arguing that the CFPB’s jurisdiction was limited to consumer financial matters and did not extend to investigating the accreditation of for-profit colleges.  Although the CFPB argued that it has the authority to investigate for-profit schools “in relation to their lending and financial-advisory services” and that this authority naturally extended into a third-party’s accreditation of these schools, the court rejected the argument.  It held that the CFPB’s “post-hoc justification” was “a bridge too far” and that ACICS’s accreditation determinations had no bearing on the schools’ lending practices.  Therefore, the court denied the CFPB’s petition to enforce its investigative demand.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com.