News Release: Supreme Court Delivers Rare Good News for Consumers


May 16, 2024

Carter Dougherty

Supreme Court Delivers Rare Good News for Consumers
Expect Further Industry Pressure on CFPB Despite Favorable Supreme Court Ruling 

The Supreme Court has upheld the constitutionality of the funding method Congress chose for the Consumer Financial Protection Bureau, allowing a vital agency to continue its work in holding Wall Street and predatory lenders to account, and promoting economic and racial justice.

“The Supreme Court has refused to bless the radical and ungrounded argument from the payday lenders that the CFPB’s funding mechanism is unconstitutional, which is good news for people and communities across the country,” said Lisa Donner, executive director at Americans for Financial Reform Education Fund. “This decision removes a major threat to the agency’s work, and reaffirms the independence that allows it to continue standing up for the public interest against abusive financial practices.”

The case stems from a lawsuit against the CFPB brought by the Community Financial Services Association over a regulation that prohibited lenders from withdrawing funds from consumer accounts after two failed attempts due to lack of funds. CFSA, a lobby group for payday lenders, argued that the CFPB’s funding, which is drawn from the Federal Reserve, is unconstitutional.

The payday lenders prevailed in the Fifth Circuit Court of Appeals and the Department of Justice appealed the case to the Supreme Court. AFREF, together with its partners, and many other experts and organizations filed amicus briefs at the high court outlining the flaws in CFSA’s logic.

“The CFPB’s wide and varied work in support of greater racial equity in financial services is a central pillar of its efforts,” said Amanda Jackson, consumer campaign director at AFREF. “But,  precisely because the CFPB stops big banks and predatory financial companies from ripping people off, extracting fees from those who can least afford it, and increasing the racial wealth gap it will continue to draw attacks from the industries it regulates and policy makers who side with them. Among other things, Wall Street and predatory lenders will keep going to the corporate friendly Fifth Circuit to try to stop CFPB actions to protect the public. Our big and diverse coalition is going to keep pushing back so we can build more financial security and a fairer economy for all of us.”

SInce its creation the CFPB has won more than $19 billion in relief for consumers ripped off by big banks and other financial wrongdoers. Recently the agency has pursued policies to rein in junk fees that cost families tens of billions of dollars each year, including by finalizing a rule to cap excessive credit card late fees, and proposing limits on punitive overdraft fees. Other key initiatives include requiring fairer credit reports, reducing the harm of medical debt collections, fighting inequity in home appraisals,  increasing consumer rights to control their own data and much more.