Former Subprime Auto Lender Tapped for FTC

Still reeling from a midterm elections rout, Senate Republicans and the White House are trying to sneak a former high-cost auto lender onto a critical seat at the nation’s top consumer protection regulator, sources familiar with the situation tell the Prospect.

Christopher Mufarrige, who currently serves as director of the Bureau of Consumer Protection at the Federal Trade Commission, is the Trump administration’s latest choice for the open Republican commissioner’s seat at the agency. That seat was made vacant by Melissa Holyoak, who left to become U.S. attorney for Utah; Mufarrige previously served as her chief of staff. David MacNeil, the CEO of a car mat company called WeatherTech, was chosen to fill this seat in January, but last week, after months without confirmation, he withdrew his nomination in anticipation of Mufarrige taking the slot.

As the Prospect reported in 2020, Mufarrige ran a business in Houston, Texas, for three years in the late 2000s called CNJ Auto Finance, which offered “buy here, pay here” used-car loans to customers with poor credit at high interest. Buy here, pay here dealers have been criticized for targeting bankruptcy filers through direct mail, squeezing a few payments out of them, and rapidly repossessing the vehicles after default, often selling the same used car multiple times to different buyers.

CNJ Auto Finance was sued on two occasions, once for taking possession of vehicles without completing payment for them, and another time for failing to pay property taxes on its inventory lot. Both cases were dismissed.

The connection to potentially unscrupulous lending was relevant at the time because Mufarrige, a graduate of and former teacher at Antonin Scalia Law School at George Mason University, worked as a senior adviser with the Consumer Financial Protection Bureau, where he was cited by a whistleblower for allegedly manipulating statistical evidence to justify watering down the agency’s payday lending rule. The whistleblower, a former CFPB economist named Jonathan Lanning, said that Mufarrige had a “tenuous, often flawed grasp of economics,” and that he selectively used information to advocate for preordained conclusions.

Mufarrige has not been formally nominated for the commission seat. But sources have indicated to the Prospect that he may get added as a last-minute addition to a Senate Commerce Committee confirmation hearing scheduled for this Tuesday.

That would be unprecedented, especially since the nominee has done no paperwork or even officially received the nomination yet. But chaos is the order of the day for a White House and a Republican Senate with precious little time left to get President Trump’s nominees confirmed. Plus, there are extenuating circumstances motivating Republicans to speed up the process.

Because of the Holyoak vacancy, there are currently only two commissioners on the FTC, after Trump successfully fired the agency’s two Democrats and the Supreme Court backed him up in Trump v. Slaughter. By statute, the FTC cannot operate with only one commissioner. And the current chair, Andrew Ferguson, is known to have been actively shopping his résumé to BigLaw firms in an attempt to exit.

If Ferguson left the FTC without another confirmed commissioner besides Republican Mark Meador, the agency would grind to a halt. And if Republicans don’t get Mufarrige through in the lame-duck session to close out the year, the incoming majority Democrats will likely make reinstating two Democratic commissioners the price of confirming Mufarrige. In other words, lack of action this year on Mufarrige would effectively trap Ferguson at the FTC.

That makes Tuesday’s hearing potentially critical. While some believe that there would be time to hold a hearing for Mufarrige in December and confirm him at the end of the year, others tell the Prospect that Tuesday’s hearing is “the last train out” for Commerce Committee nominees.

Like most of the regulatory state in Trump’s second term, the FTC has been passive and unassuming, settling most holdover cases from Lina Khan’s tenure, if not outright dismissing them, and doing little that would restrain corporate America from doing what it wants. Trump’s light touch on corporate America was primarily shepherded by Susie Wiles, the former lobbyist and deposed chief of staff seen as a liaison with and ally to big business.

Even where the FTC appeared strong—in actions coming out of Mufarrige’s Bureau of Consumer Protection—the reality was quite different. Take the record $2.5 billion settlement with Amazon about tricking people to sign up for Prime memberships and making it hard to cancel them. Amazon did not have to admit wrongdoing in the case, and a federal judge had already ruled that the company broke the law.

A separate lawsuit filed against Amazon in August about overcharging advertisers is primarily about deceiving them on prices, so the remedy is likely disclosure and a small fine, which doesn’t get to the heart of the problem: Amazon controls the platform and the advertising system, businesses need to pay for advertising to get eyeballs in the marketplace, and therefore Amazon can dictate high prices because of its market power. There is no attempt in the lawsuit to split the advertising system from the platform.

Things changed slightly over the past month, presumably as part of a pre-election maneuver to briefly side with ordinary consumers before votes were cast. In late October, the FTC sued Dollar General over the brazen practice of ringing up higher prices for customers than the price tags showed, something the Prospect wrote about years ago. The next day, it expressed an intention to block a harmful $5 billion merger to monopoly between uniform makers Cintas and UniFirst, the first major merger challenge of Trump’s second term. And the day after that, the agency initiated a surveillance pricing inquiry by seeking information from airlines, ridesharing, and delivery companies. (The FTC could have just kept the existing study going that it shut down last year.)

But Mufarrige’s profile seems aligned with the deregulatory tenor of the administration, both through his work at the CFPB to weaken restrictions on predatory lending and his time operating a business whose model is thought by many to be an example of predatory lending.