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Financial Services Law Insights and Observations

CFPB affirms states may enforce CFPA and other federal laws

Agency Rule-Making & Guidance CFPB State Issues Enforcement CFPA Consumer Finance

Agency Rule-Making & Guidance

On May 19, the CFPB issued an interpretive rule addressing states’ authority to bring enforcement actions for violations of federal consumer financial protection laws, including the CFPA. Though the Bureau is charged with, among other things, administering, interpreting, and enforcing federal consumer financial laws, a category that includes the CFPA itself, the agency said it is not the only enforcer of these laws. According to the interpretive rule, “states can enforce [federal consumer financial laws] to the full extent authorized under those laws—including against entities that are not covered persons or service providers (and thus not subject to liability under section 1036(a)(1)(A)) and including against national banks and Federal savings associations.”

The interpretive rule establishes:

  • States can enforce any provision of the CFPA, which includes making it unlawful for covered persons or service providers to violate any provision of federal consumer financial protection law. This provision covers the CFPA itself, in addition to its 18 enumerated consumer laws and certain other laws, along with any rule or order prescribed by the Bureau under the CFPA, an enumerated consumer law, or pursuant to certain other authorities.
  • States can pursue claims and actions against a broad range of entities. The interpretive rule states that “the limitations on the Bureau’s authority in sections 1027 and 1029 generally do not constrain States’ enforcement authority.” States can bring actions against a broader cross-section of companies and individuals.
  • States may pursue actions under section 1042 even if the Bureau is pursuing a concurrent enforcement action against the same entity. States are not restricted from bringing enforcement actions in coordination with the Bureau, and may also bring an enforcement action to stop or remediate harm that is not addressed by an action taken by the Bureau against the same entity. “Nothing in the [CFPA] precludes these complementary enforcement activities that serve to protect consumers at both the national and state levels,” the Bureau said in its announcement.

The Bureau stated the interpretive rule is a “part of the CFPB’s expansion of its efforts to support state enforcement activity,” and noted that it “plans to consider other steps to promote state enforcement of federal consumer financial protection law, including ways to facilitate victim redress.”