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CFPB Interpretative Rule Clarifies States’ Enforcement Authority

The rule, published and in effect on May 26, outlines states’ enforcement authority under the Consumer Financial Protection Act in addition to and beyond the authority of the CFPB.

6/2/2022 12:00 P.M.

1.5 minute read

The Consumer Financial Protection Bureau has published an interpretive rule in the Federal Register, effective May 26, to provide clarity on states’ enforcement authority under the Consumer Financial Protection Act (CFPA).

According to a news release from the CFPB, the interpretive rule “describes states’ authorities to pursue lawbreaking companies and individuals that violate the provisions of federal consumer financial protection law. Because of the crucial role states play in protecting consumers, the Consumer Financial Protection Act grants their consumer protection enforcers the authority to protect their citizens and otherwise pursue lawbreakers.”

In the rule, the CFPB provided clarity on the following points, according to a summary from Brownstein Hyatt Farber Schreck.

  • States have the authority to enforce the CFPA and the other laws contained within it, as well as any rule or order issued by the CFPB under the statute;
  • The limitations imposed by the CFPA on the CFPB’s authority largely do not constrain states’ enforcement authority; and
  • States are not restricted from bringing enforcement action independent of or concurrently with the CFPB.

Notably, the interpretive rule signals that states have the authority to independently take action against entities that engage in unfair, deceptive, or abusive act or practices (UDAAP) and fall outside the scope of the CFPB’s authority under the statute. The rule is the latest effort by the CFPB to partner with states and support enforcement efforts.

Also of note, the CFPB has memoranda of understanding with regulators in all 50 states and with 20 state attorney general offices.

According to the news release, the “CFPB plans to consider other steps to promote state enforcement of federal consumer financial protection law, including ways to facilitate victim redress.”
Read the complete interpretive rule here.

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