SubPrime Auto Finance News Staff

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The Consumer Financial Protection Bureau (CFPB) is blowing a whistle, so to speak, about whistleblowing.

On Wednesday, the bureau issued a circular to law enforcement agencies and regulators explaining how companies may be breaking the law by requiring employees to sign broad nondisclosure agreements that could deter whistleblowing.

Officials said the circular explains how imposing sweeping nondisclosure agreements that do not clearly permit communication with law enforcement may intimidate employees from disclosing misconduct or cooperating with investigations.

CFPB director Rohit Chopra said this protocol could impede investigations and potentially violate federal whistleblower protections.

“The law enforcement community uncovers serious wrongdoing by financial firms through whistleblower tips,” Chopra said in a news release. “Companies should not censor or muzzle employees through nondisclosure agreements that deter whistleblowers from coming forward to law enforcement.”

The bureau reiterated whistleblowing plays an important role in addressing illegal and unethical misconduct.

In the Consumer Financial Protection Act (CFPA), Congress included a provision specifically protecting whistleblowers from retaliation for reporting violations of consumer financial protection laws.

“Although nondisclosure agreements can be entered into for legitimate purposes, such as ensuring the protection of confidential...

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