Consumer Federation of America ("CFA") Speaks Out About CFPB's and FTC's Direction During the Trump Administration

If you work for a bank or other consumer financial services provider, you will want to listen closely to how consumer advocates are reacting to Trump's election insofar as the CFPB and FTC are concerned. In today's podcast episode, we're joined by Erin Witte and Adam Rust (the "CFA Reps") from CFA.

We focus first on CFPB and FTC regulations that might be finalized during the lame duck session of Congress. The CFA Reps express hope that the FTC would finalize its so-called "junk fee reg" which, as proposed, called for "all-in" pricing (I.e., disclosure of a dollar amount for goods and services that includes all fees that will be charged in connection with the transaction.) They also express hope that the CFPB will finalize its checking account overdraft fees reg, the larger participant rule pertaining to non-bank payment providers and the medical debt rule which, if finalized, would result in unpaid medical debt no longer appearing on credit bureau reports. Of course, there is a risk, with respect to each of these rules as well as any other CFPB and FTC rules finalized roughly after August 1 of this year, which they may be overruled by Congress under the Congressional Review Act.

We then discuss final regs promulgated by the FTC and CFPB which have been challenged in the Circuit Courts of Appeal. For the FTC, this includes the so-called CARS Rule (which imposes restrictions on car dealers' sales and financing of motor vehicles) and the recent "Click-to-Cancel" Rule which, among other things, requires sellers of goods and services on a subscription basis to be able to cancel subscriptions as easily as signing up for subscriptions. The latter rule has been challenged in four circuit courts of appeal.

We also discuss the status of many CFPB final regs and what a new CFPB's strategy may be with respect to them. They include: the $8 credit card late fee rule which is currently enjoined by a Federal District Court in Texas; the data collection reg pertaining to small business loans promulgated under Section 1071 of Dodd-Frank, which is currently on appeal before the Fifth Circuit Court of Appeals after a Federal District Court denied a motion by the bank trade associations to grant a preliminary injunction pertaining to the reg; the open-banking reg under Section 1033 of Dodd-Frank (which pertains to consumers having the ability to share information in certain bank accounts with third parties which has been challenged in court; the Buy-Now, Pay-Later interpretive rule which has been challenged in court; and the Earned Wage Access interpretive rule. There is great uncertainty as to whether the new CFPB's Director will seek to repeal or amend any of these regs or whether he or she will elect to change the CFPB's position in the litigation to side with the plaintiffs. In order to repeal or change any of the regs (other than the two interpretive rules), the CFPB will need to jump through all the hoops required by the Administrative Procedure Act before effecting a repeal or change and the repeal or change might be challenged in court as being arbitrary or capricious. It would seem that it might be much easier to repeal or change the interpretive rules which would not require publishing them in the Federal Register for notice and comment.

The CFS Reps also express hope that the CFPB issues its final report with respect to the voluminous information it received from auto finance companies in response to market monitoring orders it issued to them. An initial report recently issued by the CFPB and dealt with the incidence of financing negative equity in cars being traded in. While the final report is unlikely to result in new proposed CFPB regulations during the next four years, the report might instigate enforcement actions by state AGs.

As was the case during the first Trump presidency, the CFA Reps believe that whatever consumer protection void is created at the CFPB will largely be filled by state AGs, state departments of banking and consumer protection agencies. They also expect there to be an increase in private civil litigation, including class actions.

Alan Kaplinsky, Senior Counsel and former chair for 25 years of the Consumer Financial Services Group, hosts the discussion.