Consumer Financial Protection Bureau v. Accrediting Council for Independent Colleges & Schools
2017 U.S. App. LEXIS 6966
| D.C. Cir. | 2017Background
- ACICS is a national accreditor of for‑profit colleges; CFPB issued a civil investigative demand (CID) to ACICS seeking information about "unlawful acts and practices in connection with accrediting for‑profit colleges."
- The CID sought lists of accredited institutions, individuals who performed accreditation reviews, and testimony about ACICS’s accreditation policies and practices for specified institutions.
- ACICS refused to comply and petitioned to modify/set aside the CID; CFPB denied relief and filed to enforce the CID in district court.
- The district court denied enforcement, holding the CFPB lacked authority to investigate the accreditation process; CFPB appealed.
- The D.C. Circuit affirmed on narrower grounds: the CID’s "Notification of Purpose" failed to satisfy 12 U.S.C. § 5562(c)(2) because it did not adequately state the nature of the conduct under investigation or the applicable law, leaving ACICS without fair notice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the CID complied with 12 U.S.C. § 5562(c)(2)’s notice requirements | CFPB: Notification may be general; CID reasonably describes an investigation into unlawful acts related to accreditation and cites §§ 5531, 5536 and other consumer‑financial laws | ACICS: Notification is too vague—does not identify the specific conduct or how accreditation relates to consumer‑financial law | Held: CID invalid. Notification of Purpose was too perfunctory and failed to state the nature of the conduct and the applicable law as required by § 5562(c)(2) |
Key Cases Cited
- Morton Salt Co. v. United States, 338 U.S. 632 (agencies may investigate on suspicion; subpoena enforcement limited by relevance and scope)
- FTC v. Ken Roberts Co., 276 F.3d 583 (standards for enforcing administrative subpoenas: authority, definiteness, relevance)
- FTC v. Invention Submission Corp., 965 F.2d 1086 (agencies may define investigation broadly but must comply with statutory limits)
- SEC v. Arthur Young & Co., 584 F.2d 1018 (judicial role in subpoena enforcement and limits on agency inquiries)
- In re Sealed Case (Admin. Subpoena), 42 F.3d 1412 (agency subpoenas cannot be unfettered; overly broad purpose frustrates review)
- FEC v. Machinists Non‑Partisan Political League, 655 F.2d 380 (courts guard against abuses in subpoena enforcement)
- United States v. Powell, 379 U.S. 48 (courts may examine improper purpose in extraordinary circumstances)
- FTC v. Owens‑Corning Fiberglas Corp., 626 F.2d 966 (courts must adjudge legitimacy of administrative subpoenas rather than rubber‑stamp them)