Washington, D.C. – U.S. Senators Catherine Cortez Masto (D-Nev.), Sherrod Brown (D-Ohio), Elizabeth Warren (D-Mass.), Richard Blumenthal (D-Conn.), Ron Wyden (D-Ore.), Jeff Merkley (D-Ore.), Dick Durbin (D-Ill.) and Tina Smith (D-Minn.) introduced legislation to create a program for whistleblowers that would encourage reporting of consumer fraud and abuse to the Consumer Financial Protection Bureau (CFPB). The bill would allow the CFPB to award compensation to whistleblowers from the Civil Penalty Fund for between 10 – 30% of any settlement awards.
“Whistleblowers play a vital role in holding companies accountable for protecting consumers,” said Senator Cortez Masto. “We should be doing all we can to encourage them to come forward, especially during this pandemic when bad actors may look to take advantage of vulnerable consumers. This legislation will not only incentivize whistleblowers, but will also discourage future wrongdoing by liable companies.”
“Whistleblowers are essential to our democracy,” said Senator Brown. “Whistleblowers risk their career and their reputation to reveal corruption and bad actors seeking to exploit consumers and our government. We must do more to protect them during and after the pandemic to ensure that whistleblowers feel safe coming forward. This legislation does just that by protecting whistleblowers from retaliation and incentivizing them to come forward with their information.”
“Workers risk their livelihoods and, sometimes, their safety by exposing corrupt and unethical business practices,” said Juley Fulcher, Worker Health and Safety Advocate for Public Citizen’s Congress Watch division. “They should be rewarded for making reports that protect the average consumer. Public Citizen thanks the Senators for their leadership in protecting workers and holding employers accountable.“
“The legislation gives the CFPB access to a proven program already field-tested at the Securities and Exchange Commission,” said Professor Benjamin Edwards, Associate Professor of Law at University of Nevada, Las Vegas Boyd School of Law. “Whistleblowers often put their necks out to bring information to regulators. The possibility of an award may help more of them find the courage to report wrongdoing.”
Numerous reports have found that high rewards incentivize potential whistleblowers to come forward. Additionally, counsel for whistleblowers have previously argued that the threat of large sanctions on whistleblowers have been a deterrent against reporting misconduct by bad actors. This legislation would encourage reporting by enabling the Consumer Financial Protection Bureau to offer compensation.
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.