Banking & Credit

After Five Years, the CFPB Proves Itself to Be an Effective and Accountable Regulator

CFPB Has Set a New Higher Standard for Financial Products and Practices by Listening to Consumers, Researching Markets and Cracking Down on Abuse

 |  Press Release

Washington, D.C. — Just five years since it opened its doors, and three years after confirming a permanent director, the Consumer Financial Protection Bureau (CFPB) is hard at work protecting consumers.  To date, the CFPB has returned over $11 billion in relief to 27 million consumers, taken steps to protect consumers from abusive payday lending and other abusive and deceptive practices, moved forward with new rules on arbitration and debt collection, and developed innovative tools to understand the consumer experience in the financial marketplace.

“The CFPB is a data-driven, deliberative and accountable regulator,” said Rachel Weintraub, legislative director and general counsel at the Consumer Federation of America (CFA).  “Since 2011, the Bureau has developed an impressive track record of documenting patterns of abuse in the financial marketplace and taking decisive action to ensure that consumers are treated fairly.”

In just the last year, the CFPB has:

  •    Protected servicemembers from abusive practices.  In October of 2015, the CFPB took another strong action to protect servicemembers by ordering Security National Automotive Acceptance Company (SNAAC), an auto lender specializing in loans to servicemembers to pay $3.28 million for illegal debt collection practices.[i]  Thousands of servicemembers were victims of SNAAC’s aggressive tactics to recoup late payments which involved exaggerating the consequences of missed payments and contacting and threatening to contact superior officers about missed payments.
  • Worked to keep financial markets safe for vulnerable consumers trapped in a cycle of debt caused by payday loans. In June 2016 the CFPB issued a proposed rule[ii] to protect consumers from the harm caused by payday, car title and other abusive loans. The proposed rule is a critical step to ensuring that consumers are protected from abusive practices such as poor underwriting, back-to-back lending and abusive access to a borrower’s bank account. The proposal would require payday, auto title and installment lenders to review a borrowers’ ability to repay a loan in full and on time without additional borrowing.
  • Give consumers a voice in the financial marketplace. In June 2015, the CFPB released a major improvement to its consumer complaint database which allows the public to review the underlying stories.  Since the ability to share narratives was launched, over 80,000 consumers have voluntarily shared their stories about mortgages, credit cards, payday loans, debt collectors and other products in their own words.
  •  Ensuring consumers can obtain redress. In May of 2016,[iii] the CFPB issued a proposed rule to prohibit class action bans in consumer financial product contracts. This proposed rule follows an extensive evidence-based, data-driven study[iv] on the use of predispute binding (or forced) arbitration required by section 1028(a) of the Dodd-Frank Act, released in March 2015. The CFPB’s report found that the majority of balances at large institutions are covered by mandatory arbitration clauses. CFPB’s proposed rule will ensure that consumers will not be prevented from organizing in a class action to obtain redress if harmed as a result of an action arising out of a financial services product or contract.

“The CFPB has established and impressive track record of success but there is still much more to be done,” said Tom Feltner, director of financial services at CFA.  “Steadfast support from policymakers is critical to preserving a strong CFPB and ensuring that it has the ability to respond decisively to abusive practices.”

Contact: Rachel Weintraub, 202-939-1012; Tom Feltner, 202-618-0310

The Consumer Federation of America is an association of more than 250 non-profit consumer groups that, since 1968, has sought to advance the consumer interest through research, education, and advocacy.

[i] http://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-servicemember-auto-loan-company-to-pay-3-28-million-for-illegal-debt-collection-tactics/

[ii] https://web.archive.org/web/20170816172430/https://www.consumerfinance.gov/policy-compliance/rulemaking/rules-under-development/notice-proposed-rulemaking-payday-vehicle-title-and-certain-high-cost-installment-loans/

[iii]http://files.consumerfinance.gov/f/documents/CFPB_Arbitration_Agreements_Notice_of_Proposed_Rulemaking.pdf

[iv] http://www.consumerfinance.gov/data-research/research-reports/arbitration-study-report-to-congress-2015/