Civil Penalty Inflation Adjustments

<RULE> CONSUMER FINANCIAL PROTECTION BUREAU <CFR>12 CFR Part 1083</CFR> <SUBJECT>Civil Penalty Inflation Adjustments</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Consumer Financial Protection Bureau. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Consumer Financial Protection Bureau (CFPB) is adjusting for inflation the maximum amount of each civil penalty within the CFPB's jurisdiction. These adjustments are required by the Federal Civil Penalties Inflation Adjustment Act of 1990 (Inflation Adjustment Act), as amended by the Debt Collection Improvement Act of 1996 and further amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The inflation adjustments mandated by the Inflation Adjustment Act serve to maintain the deterrent effect of civil penalties and to promote compliance with the law. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This final rule is effective January 15, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> George Karithanom, Regulatory Implementation & Guidance Program Analyst, Office of Regulations, at (202) 435-7700 or at: <E T="03">https://reginquiries.consumerfinance.gov.</E> If you require this document in an alternative electronic format, please contact <E T="03">CFPB_Accessibility@cfpb.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> The Inflation Adjustment Act, <SU>1</SU> <FTREF/> as amended by the Debt Collection Improvement Act of 1996  <SU>2</SU> <FTREF/> and further amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, <SU>3</SU> <FTREF/> directs Federal agencies to adjust the civil penalty amounts within their jurisdictions for inflation not later than July 1, 2016, and then not later than January 15 every year thereafter. <SU>4</SU> <FTREF/> Each agency was required to make the 2016 one-time catch-up adjustments through an interim final rule published in the <E T="04">Federal Register</E> . On June 14, 2016, the CFPB published its interim final rule (IFR) to make the initial catch-up adjustments to civil penalties within the CFPB's jurisdiction. <SU>5</SU> <FTREF/> The June 2016 IFR created a new part 1083 and in part 1083.1 established the inflation-adjusted maximum amounts for each civil penalty within the CFPB's jurisdiction. <SU>6</SU> <FTREF/> The CFPB finalized the IFR on January 31, 2019. <SU>7</SU> <FTREF/> <FTNT> <SU>1</SU>  Public Law 101-410, 104 Stat. 890. </FTNT> <FTNT> <SU>2</SU>  Public Law 104-134, sec. 31001(s)(1), 110 Stat. 1321, 1321-373. </FTNT> <FTNT> <SU>3</SU>  Public Law 114-74, sec. 701, 129 Stat. 584, 599. </FTNT> <FTNT> <SU>4</SU>  Section 1301(a) of the Federal Reports Elimination Act of 1998, Public Law 105-362, 112 Stat. 3293, also amended the Inflation Adjustment Act by striking section 6, which contained annual reporting requirements, and redesignating section 7 as section 6, but did not alter the civil penalty adjustment requirements; 28 U.S.C. 2461 note. </FTNT> <FTNT> <SU>5</SU>  81 FR 38569 (June 14, 2016). Although the CFPB was not obligated to solicit comment for the interim final rule, the CFPB invited public comment and received none. </FTNT> <FTNT> <SU>6</SU>   <E T="03">See</E> 12 CFR 1083.1. </FTNT> <FTNT> <SU>7</SU>  84 FR 517 (Jan. 31, 2019). </FTNT> The Inflation Adjustment Act also requires subsequent adjustments to be made annually, not later than January 15, and notwithstanding section 553 of the Administrative Procedure Act (APA). <SU>8</SU> <FTREF/> The CFPB annually adjusted its civil penalty amounts, as required by the Act. <SU>9</SU> <FTREF/> <FTNT> <SU>8</SU>   Inflation Adjustment Act section 4, codified at 28 U.S.C. 2461 note. As discussed in guidance issued by the Director of the Office of Management and Budget (OMB), the APA generally requires notice, an opportunity for comment, and a delay in effective date for certain rulemakings, but the Inflation Adjustment Act provides that these procedures are not required for agencies to issue regulations implementing the annual adjustment. <E T="03">See</E> Memorandum for the Heads of Exec. Dep'ts & Agencies from Shalanda D. Young, Director, Implementation of Penalty Inflation Adjustments for 2025, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Off. of Mgmt. & Budget (Dec. 17, 2024), <E T="03">https://www.whitehouse.gov/wp-content/uploads/2024/12/M-25-02.pdf</E> [hereinafter Young Memo]. </FTNT> <FTNT> <SU>9</SU>   <E T="03">See</E> 82 FR 3601 (Jan. 12, 2017); 83 FR 1525 (Jan. 12, 2018); 84 FR 517 (Jan. 31, 2019); 85 FR 2012 (Jan. 14, 2020); 86 FR 3767 (Jan. 15, 2021); 87 FR 2314 (Jan. 14, 2022); 88 FR 1 (Jan. 3, 2023); 89 FR 1787 (Jan. 11, 2024). </FTNT> Specifically, the Inflation Adjustment Act directs Federal agencies to adjust annually each civil penalty provided by law within the jurisdiction of each agency by the “cost-of-living adjustment.”  <SU>10</SU> <FTREF/> The “cost-of-living adjustment” is defined as the percentage (if any) by which the Consumer Price Index for All Urban Consumers (CPI-U) for the month of October preceding the date of the adjustment, exceeds the CPI-U for October of the prior year. <SU>11</SU> <FTREF/> The Director of the Office of Management and Budget (OMB) is required to issue guidance (OMB Guidance) every year by December 15 to agencies on implementing the annual civil penalty inflation adjustments. Pursuant to the Inflation Adjustment Act and OMB Guidance, agencies must apply the multiplier reflecting the “cost-of-living adjustment” to the current penalty amount and then round that amount to the nearest dollar to determine the annual adjustments. <SU>12</SU> <FTREF/> The adjustments are designed to keep pace with inflation so that civil penalties retain their deterrent effect and promote compliance with the law. <SU>13</SU> <FTREF/> <FTNT> <SU>10</SU>  Inflation Adjustment Act sections 4 and 5, codified at 28 U.S.C. 2461 note. </FTNT> <FTNT> <SU>11</SU>  Inflation Adjustment Act sections 3 and 5, codified at 28 U.S.C. 2461 note. </FTNT> <FTNT> <SU>12</SU>  Inflation Adjustment Act section 5, codified at 28 U.S.C. 2461 note; <E T="03">see also</E> Young Memo. </FTNT> <FTNT> <SU>13</SU>   <E T="03">See</E> Inflation Adjustment Act section 2, codified at 28 U.S.C. 2461 note. </FTNT> For the 2025 annual adjustment, the multiplier reflecting the “cost-of-living adjustment” is 1.02598. <HD SOURCE="HD1">II. Adjustment</HD> Pursuant to the Inflation Adjustment Act and OMB Guidance, the CFPB multiplied each of its civil penalty amounts by the “cost-of-living adjustment” multiplier and rounded to the nearest dollar. <SU>14</SU> <FTREF/> The new penalty amounts that apply to civil penalties assessed after January 15, 2025, are as follows: <FTNT> <SU>14</SU>  Inflation Adjustment Act section 4, codified at 28 U.S.C. 2461 note. </FTNT> <GPOTABLE COLS="5" OPTS="L2,nj,tp0,i1" CDEF="s75,r25,12,15,10"> <TTITLE> </TTITLE> <CHED H="1">Law</CHED> <CHED H="1">Penalty description</CHED> <ENT I="01">Consumer Financial Protection Act, 12 U.S.C. 5565(c)(2)(A)</ENT> <ENT>Tier 1 penalty</ENT> <ENT>$7,034</ENT> <ENT>1.02598</ENT> <ENT>$7,217</ENT> </ROW> <ROW> <ENT I="01">Consumer Financial Protection Act, 12 U.S.C. 5565(c)(2)(B)</ENT> <ENT>Tier 2 penalty</ENT> <ENT>35,169</ENT> <ENT>1.02598</ENT> <ENT>36,083</ENT> </ROW> <ROW> <ENT I="01">Consumer Financial Protection Act, 12 U.S.C. 5565(c)(2)(C)</ENT> <ENT>Tier 3 penalty</ENT> <ENT>1,406,728</ENT> <ENT>1.02598</ENT> <ENT>1,443,275</ENT> </ROW> <ROW> <ENT I="01">Interstate Land Sales Full Disclosure Act, 15 U.S.C. 1717a(a)(2)</ENT> <ENT>Per violation</ENT> <ENT>2,451</ENT> <ENT>1.02598</ENT> <ENT>2,515</ENT> </ROW> <ROW> <ENT I="01">Interstate Land Sales Full Disclosure Act, 15 U.S.C. 1717a(a)(2)</ENT> <ENT>Annual cap</ENT> <ENT>2,449,575</ENT> <ENT>1.02598</ENT> <ENT>2,513,215</ENT> </ROW> <ROW> <ENT I="01">Real Estate Settlement Procedures Act, 12 U.S.C. 2609(d)(1)</ENT> <ENT>Per failure</ENT> <ENT>115</ENT> <ENT>1.02598</ENT> <ENT>118</ENT> </ROW> <ROW> <ENT I="01">Real Estate Settlement Procedures Act, 12 U.S.C. 2609(d)(1)</ENT> <ENT>Annual cap</ENT> <ENT>230,464</ENT> <ENT>1.02598</ENT> <ENT>236,451</ENT> </ROW> <ROW> <ENT I="01">Real Estate Settlement Procedures Act, 12 U.S.C. 2609(d)(2)(A)</ENT> <ENT>Per failure, where intentional</ENT> <ENT>230</ENT> <ENT>1.02598</ENT> <ENT>236</ENT> </ROW> <ROW> <ENT I="01">SAFE Act, 12 U.S.C. 5113(d)(2)</ENT> <ENT>Per violation</ENT> <ENT>35,516</ENT> <ENT>1.02598</ENT> <ENT>36,439</ENT> </ROW> <ROW> <ENT I="01">Truth in Lending Act, 15 U.S.C. 1639e(k)(1)</ENT> <ENT>First violation</ENT> <ENT>14,069</ENT> <ENT>1.02598</ENT> <ENT>14,435</ENT> </ROW> <ROW> <ENT I="01">Truth in Lending Act, 15 U.S.C. 1639e(k)(2)</ENT> <ENT>Subsequent violations</ENT> <ENT>28,135</ENT> <ENT>1.02598</ENT> <ENT>28,866</ENT> </ROW> </GPOTABLE> <HD SOURCE="HD1"> III. Procedural Requirements <FTREF/> </HD> <FTNT> <SU>15</SU>  Numbers may not multiply to totals shown because of rounding. </FTNT> <HD SOURCE="HD2">A. Administrative Procedure Act</HD> Under the APA, notice and opportunity for public comment are not required if the CFPB finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest. <SU>16</SU> <FTREF/> The adjustments to the civil penalty amounts are technical and non-discretionary, and they merely apply the statutory method for adjusting civil penalty amounts. These adjustments are required by the Inflation Adjustment Act. Moreover, the Inflation Adjustment Act direc ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 16k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━