CFPB Issues Rule Giving States More Authority to Enforce Federal Laws, Including FDCPA

The Consumer Financial Protection Bureau yesterday opened the door for states to take more regulatory and enforcement actions against financial services companies, including those in the accounts receivable management industry, issuing an interpretive rule that certifies that states can enforce the Consumer Financial Protection Act.

The CFPB also reminded state regulators yesterday that there is nothing in the Consumer Financial Protection Act prohibiting them from taking action against companies even when the CFPB brings an action of their own.

For those thinking that the Consumer Financial Protection Act doesn’t apply to the accounts receivable management industry, it’s important to note that the CFPA is a broad statute that includes prohibitions against actions and practices deemed to be unfair, deceptive, or abusive. This absolutely can include actions and practices used by companies in the ARM industry to attempt to collect on debts. The CFPA also includes prohibitions against any covered person or service provider from violating any one of 18 different consumer financial laws, including the Fair Debt Collection Practices Act as well as Regulation F.

“In the years leading up to the financial crisis, federal regulators undermined states seeking to protect families and businesses from abuses in the mortgage market,” said CFPB Director Rohit Chopra, in a statement. “Our action today demonstrates our commitment to promoting state enforcement, not suffocating it.”

The CFPB also pointed out in its announcement that states “are able to bring actions against a broader cross-section of companies and individuals” than it can, nudging states in the arm to make sure they know they have more options than they might think.

While announcing that the interpretive rule is part of a plan to support state enforcement activity, the CFPB also said it was working on other ways to help states enforce federal consumer protection laws, including ways to facilitate victim redress.

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