Andrew Harnik/AP Photo
Rohit Chopra, director of the Consumer Financial Protection Bureau, speaks as President Joe Biden meets with his Competition Council to announce new actions to lower costs for families, in the State Dining Room of the White House in Washington, March 5, 2024.
Ever since the CFPB won a landmark Supreme Court case May 16, by a 7-2 margin, upholding the constitutionality of its funding mechanism, the consumer agency has been on a roll. In one rule after another, the CFPB has essentially reverse engineered several abuses of predatory capitalism and made them illegal. Rather than leaving it to deceived consumers to take on the power of giant corporations, the CFPB does it wholesale, on citizens’ behalf.
On May 22, the CFPB issued an interpretive rule defining buy now, pay later schemes as tantamount to credit cards, and subject to all of the consumer protections against excessive borrowing charges and other deceptive practices under well-established credit card regulation under the Truth in Lending Act and other federal consumer laws.
On June 3, the agency finalized a rule to create a national registry of repeat corporate offenders. The prime target of this action is non-bank financial companies that are chronic lawbreakers. “Too often, financial firms treat penalties for illegal activity as the cost of doing business,” said CFPB Director Rohit Chopra in releasing the rule. “The CFPB’s new rule will help law enforcement across the country detect and stop repeat offenders.”
On June 4, the CFPB issued a circular warning against fine-print deception and encouraging consumer whistleblowing. In case after case, the agency found corporations inserting into contracts mandatory provisions denying consumers their rights that were in fact illegal under existing law, but unwary consumers signed them anyway.
For instance, mortgage lenders required borrowers to waive rights that cannot be legally waived. An auto loan servicer required a consumer to waive bankruptcy rights when all such contractual waivers are illegal. A bank attempted to require consumers to hold the bank harmless for the bank’s own errors in responding to garnishment orders. And on and on.
And on June 5, the agency issued yet another final rule, digging even deeper into the games corporations play, setting forth qualifications that industry bodies have to meet in order to be accepted as standard-setting bodies for member compliance under the CFPB’s Personal Financial Data Rights rule.
What all of these and other CFPB actions have in common is that they systematically track and resist the never-ending and ever-mutating variants of corporate deception that individual consumers cannot possibly keep up with. The isolated consumer is at a further disadvantage because of court rulings making class actions far more difficult to bring. The CFPB acts as a counterweight in an era when too many other intended consumer counterweights have been eviscerated.
The CFPB also demonstrates what’s possible when a resolute and incorruptible regulator such as Rohit Chopra is leading an agency, in contrast to too many regulators even in Democratic administrations, who are looking forward to revolving-door jobs in industry. The CFPB’s success is a thorough vindication of the wisdom of its architect, Elizabeth Warren, who came up with the funding mechanism via the Federal Reserve to insulate the agency against congressional and industry pressures.
The actions of the CFPB serve not just to protect consumers but to enlighten us about the dynamics and tactics of capitalism.
