CFPB Bolsters Enforcement Efforts by States
In another effort to promote enforcement of consumer protection laws, the Consumer Financial Protection Bureau last week issued an interpretive rule that supports states’ authorities to pursue lawbreaking companies and individuals that violate provisions of federal consumer financial protection law.
“In the years leading up to the financial crisis, federal regulators undermined states seeking to protect families and businesses from abuses in the mortgage market,” said CFPB Director Rohit Chopra. “Our action today demonstrates our commitment to promoting state enforcement, not suffocating it.”
The interpretive rule reinforces elements of the 2010 Consumer Financial Protection Act, which significantly restricted the ability of federal banking regulators to broadly preempt state consumer financial protections. The Act recognized the role of states in protecting consumers from financial fraud, scams and other wrongdoing. In the years since Congress granted this authority, states have used it in 33 public enforcement actions to protect consumers. States brought some of these actions in partnership with the CFPB, while others were brought by individual states or multistate groups that have included almost every state and territory in the country.
The interpretive rule affirms:
• States can enforce the Consumer Financial Protection Act, including the provision making it unlawful for covered persons or service providers to violate any provision of federal consumer financial protection law. This provision covers the Consumer Financial Protection Act itself as well as its 18 enumerated consumer laws and certain other laws, along with any rule or order prescribed by the CFPB under the Consumer Financial Protection Act, an enumerated consumer law, or pursuant to certain other authorities.
• States can pursue claims and actions against a broad range of entities. The Consumer Financial Protection Act outlines entities over which the CFPB may exercise its enforcement authority under the statute. States can bring actions against a broader cross-section of companies and individuals.
• CFPB enforcement actions do not put a halt to state actions. Sometimes states bring enforcement actions in coordination with the CFPB. A state may also bring an enforcement action to stop or remediate harm that is not addressed by a CFPB enforcement action against the same entity. “Nothing in the Consumer Financial Protection Act precludes these complementary enforcement activities that serve to protect consumers at both the national and state levels,” the Bureau said.