CONSUMER FINANCIAL PROTECTION V. ARMOND ARIA, ET AL, No. 21-55525 (9th Cir. 2022)
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The Consumer Financial Protection Act (CFPA) prohibits providers of “financial advisory services” from engaging in deceptive conduct. 12 U.S.C. Sections 5481(15)(A)(viii), 5536(a)(1)(B). Defendant mailed millions of solicitations to current and prospective college students, advertising a targeted program for assisting those students in applying for scholarships. The Consumer Financial Protection Bureau (CFPB) filed an enforcement action in the district court alleging the solicitations were deceptive. The district court agreed and granted summary judgment to the CFPB.
The Ninth Circuit affirmed the district court’s summary judgment ruling. The panel rejected Defendant’s argument that he did not provide financial scholarships are not financial in nature merely because they do not have to be repaid. Second, the record establishes that Defendant’s advice extended beyond the topic of scholarships, covering the entire field of student financial aid. Third, Defendant did, in fact, hold himself out as an expert in finance. The panel held that Defendant provided “financial advisory services,” and the district court did not err in concluding that Defendant was a “covered person” under the CFPA.
The panel held that Defendant was incorrect that the district court failed to consider the net impression of the entirety of his solicitation materials. In addition, the district court did not err by concluding that no issue of material fact existed as to the deceptive nature of Defendant’s conduct based upon the net impression created by his entire solicitation packet. Finally, the panel held that Defendant forfeited his challenge to the district court’s calculation of the restitution and civil penalties.
Court Description: Consumer Financial Protection Act. The panel affirmed the district court’s summary judgment granted to the Consumer Financial Protection Bureau (“CFPB”) in its civil enforcement action alleging that Armond Aria mailed deceptive solicitations to current and prospective college students, advertising a targeted program for assisting those students in applying for scholarships. Aria contended that he was not a “covered person” subject to the CFPB’s authority because he merely provided nonfinancial advice and free, gift-based scholarships. The Consumer Financial Protection Act (“CFPA”) lists ten categories of a “consumer financial product or service” and permits the CFPB to promulgate additional definitions by regulations. The eighth category is relevant here: “providing financial advisory services . . . to consumers on individual financial matters or relating to proprietary financial products or services . . . .” 12 U.S.C. § 5481(15)(A)(viii). The panel rejected Aria’s argument that he did not provide financial advisory services. First, Aria was incorrect in claiming that CONSUMER FINANCIAL PROTECTION BUREAU V. ARIA 3 scholarships are not financial in nature merely because they do not have to be repaid. Second, the record establishes that Aria’s advice extended beyond the topic of scholarships, covering the entire field of student financial aid. Third, Aria did, in fact, hold himself out as an expert in finance. The panel held that Aria provided “financial advisory services,” and the district court did not err in concluding that Aria was a “covered person” under the CFPA. Next, Aria contended that the district court erred by failing to consider the net impression of his solicitations when it determined that they were deceptive. The panel expressly adopted the net impression test, which provides that a solicitation may be likely to mislead by virtue of the net impression it creates even though the solicitation also contains truthful disclosures, in enforcement actions under the CFPA. The panel held that Aria was incorrect that the district court failed to consider the net impression of the entirety of his solicitation materials. In addition, the district court did not err by concluding that no issue of material fact existed as to the deceptive nature of Aria’s conduct based upon the net impression created by his entire solicitation packet. The panel held that Aria forfeited his challenge to the district court’s calculation of the restitution and civil penalties because he did not adequately raise the arguments to preserve them below. 4 CONSUMER FINANCIAL PROTECTION BUREAU V. ARIA
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