Agency Proposes Redress System for Fraud Victims
WASHINGTON (CN) - The Consumer Financial Protection Bureau has proposed a records system to help victims of financial fraud recover money from the institutions responsible, as part of implementing the Dodd-Frank Act.
In response to the 2008 financial crisis, the Dodd-Frank Act established a consumer financial civil penalty fund to be used "for payments to the victims of activities for which civil penalties have been imposed under the federal consumer financial laws."
Previously, the Consumer Financial Protection Bureau addressed how it plans to collect funds from banks and other entities that are ordered to pay money for breaking financial laws.
In a notice published Tuesday, the bureau proposed a new system of records that will allow it to track and manage how money is distributed to consumers.
The system would cover "individuals identified as victims or potential victims who may receive payments from the civil penalty fund or through bureau-administered redress," among others.
These include consumers who have been customers of banks or other entities that were ordered to pay a civil penalty through a bureau action.
"The system will enable the CFPB to manage the distribution of Civil Penalty Fund and redress monies to consumers, including: (1) Tracking the collection, allocation, and distribution of funds in the Civil Penalty Fund and redress monies; (2) identifying and locating victims who may receive payments from the Civil Penalty Fund and/or redress payments; (3) determining the amounts of the Civil Penalty Fund payments and redress payments that the bureau will make to victims; (4) maintaining accounting and financial information associated with such payments; and (5) developing reports to applicable federal, state, and local taxing officials of taxable income, and reports necessary to meet other reporting requirements," the bureau wrote.
Comments on the proposed system may be submitted before July 11, and "unless the comments received result in a contrary determination," the system will go into effect on July 22.