To bolster consumer financial protection efforts by the states, the CFPB has recently issued an Interpretive Rule reaffirming state authorities to initiate enforcement actions based upon violations of the federal Consumer Financial Protection Act of 2010 and other federal and state consumer financial protection statutes. The Interpretive Rule clarifies that states may maintain their own concurrent enforcement actions against companies that are already subject to an enforcement action initiated by the CFPB.
The primary consequence of issuance of the Interpretive Rule, together with greater collaboration with AGs and state consumer financial protection agencies, is an expected overall increase in both federal and state enforcement actions that are intended to protect consumers from harm and deter violations of law, though the intensity of state enforcement efforts is likely to vary by state. In announcing the new Interpretive Rule, the CFPB stated its intent to take additional steps to promote state enforcement of federal consumer financial protection law, such as by facilitating victim redress, as described in the CFPB Director’s remarks before the National Association of Attorneys General (“NAAG”) meeting in December 2021.
Against the backdrop of new and future federal and state coordination of enforcement measures, it is important for companies and service providers that are subject to the supervision and enforcement of the CFPB and to the concurrent jurisdiction of AGs and state consumer financial protection agencies to understand the legal theories and enforcement options that can be pursued and to take steps to protect against contentious actions. This Reed Smith commentary describes the key elements, context and implications of the new CFPB Interpretive Rule.