Thursday, June 25, 2020

Whistleblower Bounties at the CFPB?

The CFPB recently proposed a whistleblower bounty program to enhance its enforcement efforts. Last week, Senator Cortez Masto introduced legislation to make it a reality.  Although the Bill's text is not yet available, the press release explains its scope:

Specifically, the Financial Compensation for CFPB Whistleblowers Act would allow the Consumer Financial Protection Bureau to reward whistleblowers from the Civil Penalty Fund for between 10 – 30% of settlement awards. In cases involving monetary penalties of less than $1 million, the CFPB would be able to award any single whistleblower 10% of the amount collected or $50,000, whichever is greater. The proposal allows for a whistleblower to retain independent counsel, does not require the whistleblower to enter a contract with the Consumer Bureau and protects a whistleblower’s identity.

Interestingly, CFPB's proposed text does not include any reference to an anti-retaliation cause of action.  If we really want whistleblowers to come forward, it may make sense to offer more than just a carrot.  Employees may also need real protection from an employer's stick.  Other existing and proposed whistleblower bounty statutes also include anti-retaliation provisions and causes of action for whistleblowers.  Enhancing a cause of action here might cause trim away some risk and help employees find the courage to make a report to the CFPB.

Update:  Thanks to Jason Zuckerman for pointing out that unlike the Dodd-Frank provision for the SEC which created a bounty and and anti-retaliation provision at the same time, the CFPB already has an anti-retaliation provision.  It seems to resemble the Sarbanes-Oxley cause of action and require an initial report through the department of labor.  My view is that it would probably be best to just allow whistleblowers alleging retaliation to go directly to court.

 

https://lawprofessors.typepad.com/business_law/2020/06/whistleblower-bounties-at-the-cfpb.html

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Comments

Providing whistleblower awards to CFPB whistleblower could significantly enhance consumer financial protection. I agree that protecting whistleblowers against retaliation is critical. Congress enacted a whistleblower protection provision in the Consumer Financial Protection Act. See 12 U.S.C. § 5567. It protects disclosures to the CFPB and internal disclosures.

Posted by: Jason Zuckerman | Jun 25, 2020 6:37:56 PM

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