Judge Rebuffs CFPB Funding Argument in Denying MTD in CFPB Case Against TransUnion

A District Court judge in Illinois has rebuffed arguments from a defendant being sued by the Consumer Financial Protection Bureau that a recent Appeals Court decision invalidating the mechanism through which the Bureau is funded is sufficient grounds to have the lawsuit dismissed, denying the plaintiff’s motion.

A copy of the ruling, in the case of CFPB v. TransUnion and John Danaher, can be accessed by clicking here.

The Bureau sued the credit reporting agency and one of its executives back in April, accusing them of violating a 2017 consent order related to alleged deceptive marketing tactics used to sell credit-repair products to consumers.

The ruling from the Fifth Circuit that said the way in which the CFPB is funding — through the Federal Reserve Board and not the congressional appropriations process — was one of a handful of arguments put forth by the defendants in seeking the motion to dismiss. In this case, it appears that Judge Elaine E. Bucklo of the District Court for the Northern District of Illinois is choosing to side with a number of other courts that have ruled in previous years that the CFPB’s funding mechanism is constitutional. A “substantial majority” of courts have ruled that they are “ill-equipped to second guess exactly how Congress chooses to structure the funding of financial regulators like the Bureau, so long as the funding remains tethered to a law passed by Congress,” Judge Bucklo wrote.

Danaher also attempted to argue that the original consent order was not enforceable against him, only TransUnion, and that enforcing the consent order against him violated his due process. He also argued that the complaint fell short of what was required to allege individual liability. But Judge Bucklo didn’t see it that way.

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