Chopra: CFPB ‘Firing on All Cylinders’

The director of the Consumer Financial Protection Agency vowed Friday to resume enforcement actions that were delayed by a legal challenge to the agency that the Supreme Court dismissed in a 7-2 ruling Thursday.

CFPB Director Rohit Chopra said the Bureau is adding another 75 investigators and lawyers, resuming its campaign to “stop the creep of junk fees,” closing the late fee loophole for credit cards and considering new rules to prevent the “weaponizing of credit reports” by some who use abusive reporting practices that can intimidate households “to pay a bill they might not even owe.”

“The CFPB will be firing on all cylinders,” Chopra said in a briefing to reporters on Friday.

To wit, an hour later, the CFPB announced it had sued the online lending platform SoLo Funds for allegedly deceiving borrowers about the total cost of loans. The Los Angeles-based fintech brokers loans of $20 to $575 between consumer and investor lenders.

“The CFPB is suing SoLo for using digital trickery to hide interest and fees on its online loans,” Chopra said in a news release announcing the suit. “SoLo has had repeated run-ins with state regulators, and we are putting a stop to their fake tipping scheme.”

The 7-2 Supreme Court ruling was a setback for the major credit union trade groups. CUNA and NAFCU filed a brief last July with the Supreme Court to support the payday lenders’ suit. The two trade groups merged in January, becoming America’s Credit Unions.

While CUNA and NAFCU joined the ranks of bankers and some other business groups in supporting the payday lenders, the Mortgage Bankers Association did not. Instead it filed a brief that asked the court to ensure that whatever decision it made that it not upend the rules and regulations that provided order to the market.

“MBA is relieved that the Supreme Court avoided a ruling that would have disrupted the housing and mortgage markets, and harmed the economy and consumers,” MBA President/CEO Bob Broeksmit said in a statement Thursday.

“While we frequently disagree with the Bureau on how they interpret or enforce particular rules, a decision that would have invalidated the Bureaus’ previous rules could have had severe consequences for single-family and multifamily mortgage markets,” Broeksmit said.

America’s Credit Unions and some other business groups have vowed to continue their campaign against what they consider the CFPB’s regulatory overreach.

“We strongly believe that the CFPB’s current funding structure lacks accountability to Congress and the consumers the Bureau is tasked with serving,” Jim Nussle, president/CEO of America’s Credit Unions, said in a statement Friday. “America’s Credit Unions will continue to advocate for accountability and transparency at the Bureau, as well as push back against the CFPB’s continued regulatory overreach.”

Nussle’s words followed a statement Thursday from American Bankers Association President/CEO Rob Nichols that the ABA would shift its attention back to recent CFPB actions and seek remedy through further litigation or Congress.

“All too often, this CFPB has chosen to ignore the law and the will of Congress with significant negative consequences for the consumers the Bureau is supposed to protect, and that must come to an end,” Nichols said. “Only by placing limits on this rogue regulator can we ensure that consumers are truly protected and that banks can continue to provide them with the financial products they want and need.”

However, the ruling was hailed by consumer groups, which have become increasingly active in defending the agency.

The National Consumer Law Center said Thursday the CFPB “has effectively used its authority to serve the public interest” since its creation in 2010 in the wake of financial abuses that triggered the Great Recession in 2007. Over those 14 years, CFPB actions have resulted in $19 billion in ordered relief for more than 195 million eligible consumer accounts and the CFPB has issued $4.8 billion in civil money penalties “to hold bad actors accountable and deter abusive practices.”

“Predatory lenders and companies that rip consumers off with illegal junk fees have been trying to undermine the CFPB since it was created, and their attack on the CFPB’s funding was a baseless attempt to reclaim the power of corporate lobbyists to defund the agency and use back-room deals to protect unfair practices,” Lauren Saunders, the group’s associate director, said.

”The CFPB can now resume enforcement actions that have been frozen against illegal or deceptive practices by high-cost lenders that ripped off service members, student debt relief schemes, and predatory auto lenders that hid the costs of loans designed to fail,” Saunders said.