The United States' high court turned down a case involving a former biweekly mortgage-payment services firm that has been fighting a Consumer Financial Protection Bureau penalty for a decade.
The Supreme Court this week declined to hear an appeal from Nationwide Biweekly Administration, which has
Law360 first reported the update.
The regulator accused Nationwide Biweekly in 2015 of violating the Consumer Financial Protection Act with deceptive marketing around its "Interest Minimizer Program." The business allegedly knew customers would pay more in program fees than they would save in mortgage payments, and collected around $49 million in setup fees between 2011 and 2014, the bureau said.
A legal battle resulted in the CFPB's first trial over an enforcement action, and a federal court in 2017 imposed a limited injunction on the company. Both parties appealed that outcome and the case seesawed in district and appellate courts ultimately concluding with the penalties.
Nationwide Biweekly appealed to the Supreme Court on two distinct legal arguments, suggesting it was disadvantaged at the outset of the case. The high court didn't provide a reason for its denial.
Neither a spokesperson for the bureau nor the attorney for NBA in its Supreme Court petition returned requests for comment Tuesday.
Why the regulator targeted the firm
The business operated between 2002 and 2015 and counted over 135,000 customers, according to court filings. Its attorney described it as a "$128 million company" and it had 160 employees.
Nationwide Biweekly claimed its biweekly installments, which resulted in one additional mortgage payment per year, would achieve further savings for borrowers. The company, which advertised its services in television ads, charged a setup fee of $995 and annual processing fees between $83 and $101.
The CFPB criticized the business, suggesting consumers would have to stick with the program for many years to recoup savings. At the time of the 2015 action, only a quarter of customers were enrolled in the Interest Minimizer Program for four or more years.
Founder Daniel Lipsky
The SCOTUS appeal
After an appellate court remanded the case for reconsideration in 2023, the lower court reached its heavier judgment in 2024, including the civil money penalty. NBA appealed, and the Ninth Circuit upheld the ruling, leading to the company's petition to the Supreme Court.
In a 37-page filing, an attorney for NBA raised constitutional questions around then-CFPB director Richard Cordray's actions. Cordray also investigated the firm in 2010 as Ohio attorney general, and came to an agreement with the business regarding its marketing practices.
At the CFPB, Cordray however acted swiftly in the surprise complaint and press release. NBA argued that the director ignored an Obama-era directive for feds to act transparently, like when Cordray was more cooperative in the Ohio probe.
The company also asked the Supreme Court to review the appellate court's request for NBA's bank partners to testify whether the CFPB's press release prompted their debanking. No bank would have testified against their regulator, the company argued.
"A regulator need only stigmatize publicly and let supervised entities deliver the deprivation," the petition read.
The CFPB, despite its wind down under Acting Director Russell Vought, has continued to undertake some enforcement actions. That includes a $9 million settlement with pawn operator FirstCash last summer over its alleged overcharging of service members on small-dollar loans.
