the Consumer Financial Protection Bureau (CFPB) issued an interpretive rule that describes states’ authorities to pursue lawbreaking companies and individuals that violate the provisions of federal consumer financial protection law. Because of the crucial role states play in protecting consumers, the Consumer Financial Protection Act grants their consumer protection enforcers the authority to protect their citizens and otherwise pursue lawbreakers.
“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.”
When Congress passed the Consumer Financial Protection Act in 2010, it recognized the important role of states in protecting consumers from financial fraud, scams, and other wrongdoing. In the run-up to the Great Recession, federal banking regulators took numerous steps to undermine state regulators and enforcers, deteriorating protections for mortgage borrowers and setting the stage for the subprime crisis. Through the Consumer Financial Protection Act, Congress significantly restricted the ability of federal banking regulators to broadly preempt state consumer financial protections.
In addition, Congress sought to enhance states’ enforcement abilities, so states were empowered to enforce the Consumer Financial Protection Act’s consumer protection provisions. This authority was provided for both state attorneys general and state regulators. 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.
These actions are in addition to other collaboration and cooperation efforts among the CFPB and states. The CFPB has memoranda of understanding to promote and enable these efforts with over 20 state attorney general offices, as well as regulators in all fifty states, the District of Columbia, and Puerto Rico.
Today’s 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 are able to 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.