The Next CFPB Semi-Annual Review is November 29th (before the House) & November 30th (Senate)
Here’s What to Expect
Director Chopra’s testimony comes on the heels of new polling that shows American voters across the political spectrum overwhelmingly support being protected from the corporate financial industry and stopping the ongoing Republican attacks on the CFPB.
This popularity isn’t surprising, considering the CFPB has delivered approximately $19 billion in relief for consumers, $4.2 billion in civil penalties, and economic redress to more than 200 million consumer accounts. Its Office of Consumer Response has received and processed over 3,200 consumer complaints in 2022 and received redress for consumers within 15 calendar days of the initial complaint. The Bureau has taken decisive enforcement action against repeat offenders like Wells Fargo for its widespread mismanagement of auto loans, mortgages, and deposit accounts.
Most members of the Committee will treat the Semi-Annual Review hearings as intended: an opportunity to ask useful, probing questions about how the Bureau is protecting consumers and making financial services safe, fair, and trustworthy for everyone.
The CFPB was created 12 years ago by Congress for this reason: to protect our economy and its consumers against faulty, predatory financial products. This trust in our financial services and institutions is essential to the health of our economy.
Americans for Financial Reform has submitted to the congressional committees that oversee the CFPB a Statement for the Record that outlines a few key CFPB policy priorities. It also highlights enforcement actions that “illustrate the breadth of the CFPB’s consumer protection impact under the current administration:”
- Addressing Forced Arbitration Clauses. Lenders and financial services companies use mandatory arbitration clauses to leave consumers effectively powerless to hold companies accountable. In January, the Bureau proposed a rule requiring supervised non-banks to register these terms in a repository. Although this is a step in the right direction to uncover fine print traps, AFR urges the CFPB to propose a strong rule banning or restricting forced arbitration.
2. Reducing Junk Fees. The Bureau has been diligent in its work to reduce exploitative junk fees that distort the true price of products.
a. In February, the CFPB launched an effort to save consumers billions of dollars a year by reducing credit card late fees from $35 to $8. AFR urges the finalization of a strong rule–one that mirrors the Bureau’s strong proposal expected to save consumers $9 billion a year.
b. Big banks made $12.4 billion by charging marginalized consumers overdraft fees at the height of the pandemic. The attention the Bureau has brought to the problem has led to progress as many institutions responded by reducing or eliminating overdraft fees. AFR continues to believe a strong rulemaking is crucial and is encouraged that a rule proposal appeared on the Bureau’s spring regulatory agenda.
c. On July 11, the Bureau issued an order against Bank of America for charging customers repeat non-sufficient fund fees, mandating BOA refund approximately $80.4 million in redress for these fees and pay a $60 million civil penalty.
3. Removing medical debt from credit reports. The CFPB recently announced that it is requiring the big three credit reporting agencies to remove all medical debt from consumer credit reports, plus limit creditors’ reliance on medical bills for underwriting decisions, and prevent coercive debt collection practices. This is a step in the right direction; AFR also urges the Bureau to keep a watchful eye on the distribution and use of medical credit cards and the debt collection practices of nursing homes.
4. Ensuring consumers’ credit reports are accurate. On October 12th, the CFPB, in conjunction with the FTC, took action against credit report agency TransUnion for failing to place timely security freezes and locks on consumer credit reports and failing to ensure consumer credit reports were accurate during rental screenings putting consumers at risk for wrongful housing denials. The Bureau ordered TransUnion to pay $3 million in redress and $5 million in civil penalties for violating the law.
5. Ensuring auto lending is sufficient, fair, non-discriminatory. Auto loans are the third largest consumer credit market in the United States with over $1.4 trillion in outstanding debt, double the amount from 10 years ago. AFR applauds the CFPB for launching its Auto Data Pilot to uncover trends in arbitrarily assigned interest rates, causing Black Indigenous People of Color (BIPOC) consumers to spend more on their cars. AFR encourages the CFPB to go even further to prevent discrimination, ensure affordable credit as costs rise, monitor practices in loan servicing that aid in the wrongful repossession of vehicles, and more.
6. Continuing to rigorously crack down on discrimination in financial services: On November 8th, the Bureau ordered Citibank (Citi) to pay $25.9 million for intentionally and illegally discriminating against credit card applicants of Armenian descent.
7. Promoting safety and security for digital wallets and other newer fintech products.
a. With the use of digital wallets on the rise and payment systems used by big technology companies to transfer large sums of money, the CFPB introduced earlier this month a proposed rule to identify which large market participants of general-use digital consumer payment applications will be subject to its supervisory authority. This proposed rule would ensure that nonbank financial companies adhere to the same consumer protections as large banks, credit unions, and other financial institutions.
b. On October 17th, the CFPB took direct action against Chime Inc. for deceptive practices related to its Sendwave mobile app, ordering refunds of nearly $1.5 million to affected consumers and a $1.5 million penalty to be paid to the CFPB’s victim relief fund.
8. Collecting data on lending to small businesses (1071). AFR is very pleased to see the CFPB finalize its rule to enact section 1071 of Dodd-Frank to collect data on small businesses and women- and minority-owned businesses lending. Small businesses – especially women- and minority-owned businesses – have trouble attracting needed capital. The CFPB’s data collection will provide a valuable tool to address this problem while shining a light on historical injustices.
Many members of Congress, like the overwhelming majority of voters they represent, understand that the CFPB gives consumers greater voice and representation in the face of tremendous financial industry power and, as noted above, against financial sector misconduct, discrimination, and other failures to abide by the law.
However, based on previous Semi-Annual Review hearings, we know some members of Congress will pedal industry talking points in an attempt to tear down consumer protection measures, rather than to improve them. They will also outright attack the CFPB’s legal authority to enforce consumer protection laws (ignoring that the CFPB was created by Congress for these very functions). This may be somewhat useful to industry who would rather not play by the rules, but it is not useful to consumers or to the wider economy.
As our colleagues at Accountable.US and Revolving Door Project have revealed, many of the committee members who regularly use these hearings to attack consumer protections also receive significant campaign contributions from financial industry lobbies. We don’t believe that’s a coincidence.
- “House Financial Services Committee Republicans’ Vitriol Towards CFPB Director Chopra Follows Long History Of Opposition To Consumer Protections” (Accountable.US, June 12, 2023)
- “Here’s Why Chairman McHenry Is Desperate to Justify Junk Fees” (Accountable.US, June 14, 2023)
- “GOP Corporate Shills Say The Quiet Part Loud At CFPB Hearing” (Revolving Door Project, June 15, 2023)
Consumer protections should be robust, fair and effective, we believe – just as the vast majority of voters do. Consumer protections, enacted by a dedicated bureau, the CFPB, are a correction to years of well-documented industry abuse, price-gouging, and outright cheating. They protect and strengthen our economy by improving safety, fairness, and trust in financial products and services.
The CFPB Director comes to these hearings ready to hold productive discussions about the bureau’s hard work. This time, we urge all members to do the same.