On May 19, the Consumer Financial Protection Bureau (CFPB or Bureau) issued an interpretive rule, describing states’ authorities to pursue companies and individuals that allegedly violate any of the federal consumer financial laws enforced by the CFPB.

CFPB Director Rohit Chopra described this action as “promoting state enforcement, not suffocating it.” It openly invites states to exercise their authority under Section 1042, “Preservation of Enforcement Powers of States,” of the Consumer Financial Protection Act of 2010 (CFPA) to not only bring lawsuits in federal court for unfair and deceptive acts and practices (UDAAP) violations under the CFPA, but also bring federal actions for any violations of the “enumerated consumer laws” enforced by the CFPB.

The CFPB alleges that while some states have joined the Bureau in alleging violations of enumerated federal consumer financial laws, few have pursued non-UDAAP claims in their own CFPA actions. Hence the interpretive rule.

This reminder comes almost six months after Chopra’s remarks in December 2021 to the National Association of Attorneys General (NAAG). At the NAAG meeting, Chopra spoke about how federal preemption of strong state consumer protections led to “disastrous consequences” in the lead up to the financial crisis a decade ago. This sentiment is echoed in the recent announcement by Chopra:

“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. [The CFPB’s] action today demonstrates our commitment to promoting state enforcement, not suffocating it.”

This latest announcement from the CFPB reminds states that:

  • States can enforce all statutes and regulations under the Consumer Financial Protection Act, even without the CFPB.
  • States can pursue claims and actions against a broad range of entities.
  • CFPB enforcement actions do not put a halt to state actions.

In short, the continuing uptick in state-level consumer protection enforcement does not appear poised to abate anytime soon. Rather, we anticipate that the current trend of increasing state legislation and regulatory scrutiny will continue and be further bolstered by the CFPB. Companies must be prepared to navigate the increasingly complex overlay of federal and state compliance requirements, particularly as one frequently begets the other.

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Photo of James Kim James Kim

James advises fintechs, banks, investors, and other clients regarding federal and state consumer financial laws and regulations, including Title X of the Dodd-Frank Act (UDAAP), TILA, RESPA, EFTA, and the FCRA. He helps clients navigate examinations and investigations with the Consumer Financial Protection…

James advises fintechs, banks, investors, and other clients regarding federal and state consumer financial laws and regulations, including Title X of the Dodd-Frank Act (UDAAP), TILA, RESPA, EFTA, and the FCRA. He helps clients navigate examinations and investigations with the Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board, Federal Trade Commission (FTC), and various state agencies.

James also assists clients with product development, regulatory due diligence, and matters involving cutting-edge issues, such as financial technology, data aggregation, credit and prepaid cards, and marketplace lending.

James served as a senior enforcement attorney with the CFPB, where he coordinated with the FTC, Office of the Comptroller of the Currency, FDIC, Federal Communications Commission, and state attorneys general. He was lead counsel in the CFPB’s first enforcement actions involving mobile payments, and a member of an interdepartmental credit card/prepaid card/emerging payments issue team.

James is highly rated by Chambers USA, which uses client and peer feedback to list top attorneys in private practice. As one client told Chambers in 2021: “James is excellent. He came from the CFPB so he has the insider knowledge…He has a very strong background in enforcement and supervision matters, a very quick turnaround time and meets the deadline every single time.”

Photo of Stefanie Jackman Stefanie Jackman

Stefanie devotes her practice to assisting financial services institutions facing state and federal government investigations and examinations, counseling them on complex compliance issues, as well as defending them in individual and class action lawsuits. Stefanie represents clients across the financial services industry, including…

Stefanie devotes her practice to assisting financial services institutions facing state and federal government investigations and examinations, counseling them on complex compliance issues, as well as defending them in individual and class action lawsuits. Stefanie represents clients across the financial services industry, including banks and nonbanks, mortgage banking lenders and servicers, debt collectors and buyers, third-party service providers, health care and medical revenue cycle service providers, credit and prepaid card companies, auto lenders, and fintechs. She regularly advises her clients on issues arising under an array of federal and state consumer financial laws, including UDAP/UDAAP statutes, the FDCPA, FCRA, TCPA, EFTA, SCRA, and TILA.

In addition to her litigation and government investigations work, Stefanie focuses a significant portion of her practice on providing compliance-related advice to her clients. She regularly counsels clients on conducting compliance assessments relating to their debt collection, credit reporting and dispute resolution processes, fair lending and underwriting, and vendor oversight, as well as the functionality of their overall compliance management system. Stefanie also brings her litigation and enforcement experience to bear in assisting clients in designing new products and processes, including product structuring, advertising, online application flows, underwriting, and servicing-related strategies.

Photo of Chris Willis Chris Willis

Chris is the co-leader of the Consumer Financial Services Regulatory practice at the firm. He advises financial services institutions facing state and federal government investigations and examinations, counseling them on compliance issues including UDAP/UDAAP, credit reporting, debt collection, and fair lending, and defending…

Chris is the co-leader of the Consumer Financial Services Regulatory practice at the firm. He advises financial services institutions facing state and federal government investigations and examinations, counseling them on compliance issues including UDAP/UDAAP, credit reporting, debt collection, and fair lending, and defending them in individual and class action lawsuits brought by consumers and enforcement actions brought by government agencies.

Chris also leverages insights from his litigation and enforcement experience to help clients design new products and processes, including machine learning marketing, fraud prevention and underwriting models, product structure, advertising, online application flows, underwriting, and collection and loss mitigation strategies.

Chris brings a highly practical focus to his legal advice, informed by balancing a deep understanding of the business of consumer finance and the practical priorities of federal and state regulatory agencies.

Chris speaks frequently at conferences across the country on consumer financial services law and has been featured in numerous articles in publications such as the Wall Street Journal, the New York Times, the Washington PostAmerican BankerNational Law JournalBNA Bloomberg, and Bank Safety and Soundness Advisor.