Washington D.C. — Today the Consumer Financial Protection Bureau (CFPB) issued a policy statement attempting to narrow the federal law that prohibits abusive financial acts and practices by banks, debt collectors, payday lenders, and other consumer finance companies.
In the wake of the 2008 financial crisis Congress enacted a statute that prohibits abusive acts or practices in consumer finance. Current federal law prohibits taking unreasonable advantage of consumers who do not have the ability to protect themselves or lack an understanding of the risks in complicated financial contracts.
“Today’s policy statement attempts to rewrite federal law without authorization from Congress or a court order,” said Professor Christopher Peterson, Director of Financial Services for the Consumer Federation of America. “The new policy statement fabricates a ‘good faith’ exception that lets businesses engaging in abusive practices off the hook for financial penalties when they claim violations of the law were unintentional.” The policy also imposes a new cost-benefit framework on law enforcement that will slow investigations and create an artificial barrier to protecting the public.
Peterson explained, “Every American consumer deserves law enforcement that is creative and flexible enough to protect them from abusive financial practices. Today’s decision will embolden debt collectors, payday lenders, and other finance companies to be more reckless and indifferent to the welfare of their customers.”
Professor Christopher Peterson, a former CFPB law enforcement official, stated, “This policy will make it easier for the banking industry to insert tricks and traps in their contracts with the public. Under the Trump Administration, our consumer protection agency is protecting payday lenders, debt collectors, and credit reporting agencies instead of consumers. And, sadly, our federal consumer protection officials issued this unpopular and unlawful statement on a Friday afternoon, hoping that the public will not notice.