Proceed with Caution: Expanded Role for the FTC on the Road Ahead

Recent changes in agendas and leadership at the federal level are prompting companies offering financial products and services to question what consumer protection enforcement will look like on the road ahead. There has been significant discussion about the increasing role of state regulators, including state attorneys general, in filling the perceived void that may be left by agencies like the Consumer Financial Protection Bureau (CFPB). Many state regulators have indicated that they are ready to step up enforcement, and a number already are doing so; however, this does not mean that the industry should shift its focus exclusively to the states.

The Federal Trade Commission (FTC), which once dominated the playing field on many consumer protection issues, is reclaiming a prominent role. By way of example, prior to the CFPB’s inception, the FTC took a series of enforcement actions that significantly reshaped mortgage servicing well before the CFPB codified its rules. However, passage of the Dodd–Frank Act, Pub. L. No. 111-203, § 929-Z, 124 Stat. 1376, 1871 (2010) (codified at 15 U.S.C. § 78o), and creation of the CFPB made the FTC’s role in the federal consumer protection landscape seem uncertain at times for companies offering financial products and services. Under Dodd-Frank, the FTC retained its authority to enforce numerous consumer protection laws and to enforce CFPB rules applicable to entities within the FTC’s jurisdiction (see 15 U.S.C. § 1607(c)), including most providers of financial services that are not banks, thrifts, or federal credit unions. Yet, on certain issues, the FTC seemed to cede enforcement authority to the CFPB, which also acquired many of the commission’s most seasoned consumer protection lawyers.