United States Court of Appeals For the Seventh Circuit ____________________ No. 19-3396 CONSUMER FINANCIAL PROTECTION BUREAU, Plaintiff-Appellee, v. CONSUMER FIRST LEGAL GROUP, LLC, et al., Defendants-Appellants. ____________________

Appeal from the United States District Court for the Western District of Wisconsin. No. 3:14-cv-00513-wmc — William M. Conley, Judge. ____________________

ARGUED JANUARY 12, 2021 — DECIDED JULY 23, 2021 ____________________

Before EASTERBROOK, WOOD, and ST. EVE, Circuit Judges. WOOD, Circuit Judge. The financial crisis of 2007–2008 sent shock waves throughout the national economy. Perhaps no- where were the effects felt harder than in the residential mort- gage sector. According to one source, more than seven million homes entered foreclosure between 2007 and 2010. See S. Rep. No. 111-176, at 39 (2010). This appeal concerns the rules that apply to mortgage-assistance relief services. The question is whether the Consumer Financial Protection Bureau (“the 2 No. 19-3396 Bureau”) correctly declined to treat two high-volume, na- tional law practices under the rules governing lawyers, and thus whether the stiff penalties that were imposed on the firms (and their principals) can stand. We conclude that the Bureau’s decision that the firms and lawyers were not en- gaged in the practice of law was supported by the record, but that further proceedings are necessary on the issue of reme- dies. I As desperate people faced the imminent loss of their homes, many for-profit mortgage-assistance relief services (MARS), which promised to obtain loan modifications that would stave off foreclosure, sprang up. The more dubious among these businesses charged consumers thousands of dol- lars in up-front fees and induced signups through deceptive statements about the quality of their services. Mortgage As- sistance Relief Services, 75 Fed. Reg. 75092, 75095–96 (Dec. 1, 2010). The money often bought little to nothing. Once a per- son enrolled, many MARS providers “fail[ed] to perform even the most basic promised services or achieve any beneficial re- sults.” Id. at 75097. This was doubly unfortunate because, at the same time, many nonprofits and government agencies of- fered similar services at no cost. Id. at 75093–94 & nn.29–35. Congress quickly identified mortgage-relief scams as a glaring problem, and it directed the Federal Trade Commis- sion to issue rules relating to “unfair or deceptive acts or prac- tices involving loan modification and foreclosure rescue ser- vices.” Credit Card Accountability, Responsibility, and Dis- closure Act of 2009, Pub. L. No. 111-24, § 511(a), 123 Stat. 1734, 1764; see also Omnibus Appropriations Act of 2009, Pub. L. No. 111-8, § 626(a), 123 Stat. 524, 678 (instructing the FTC to No. 19-3396 3 “initiate a rulemaking proceeding with respect to mortgage loans”). The FTC did so, issuing its final rule on December 1, 2010. See 75 Fed. Reg. 75092 (then-codified at 16 C.F.R. pt. 322, now at 12 C.F.R. pt. 1015). The rule focused on the “widespread” “unfair or deceptive practices of MARS providers” and the harm these actors had inflicted on consumers. Id. at 75096. Among other things, the rule prohibited MARS providers from charging upfront fees, telling consumers not to talk to their lenders, and misrepresenting material aspects of their services. See 12 C.F.R. §§ 1015.3, 1015.5. The rule also addressed the role of attorneys. It acknowl- edged that many attorneys and law firms that represent finan- cially distressed persons offer mortgage-relief services in con- nection with their legal practice. Id. at 750