National Consumers League

Happy 5th Anniversary to the CFPB


hrudder.jpgSince its inception five years ago, the Consumer Financial Protection Bureau (CFPB) has worked tirelessly to protect consumers from deceptive and abusive financial practices through its implementation of rules, programs, and new protective financial tools. For the past three years, under the direction of Richard Cordray, former Attorney General of Ohio, the CFPB has handled over 900,000 consumer complaints with 97 percent of those complaints receiving timely replies.  Over 25 million consumers will receive over $11.4 billion in relief from CFPB enforcements.  

The CFPB is originally the brainchild of Senator Elizabeth Warren (D-MA), who first proposed the agency in 2007 during her time as a Harvard Law School Bankruptcy Law author and professor, in order to protect consumers from, in her words, the “tricks and traps” of financial products and practices. When Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010, it created the CFPB. President Obama then appointed Warren as Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau. Richard Cordray was later appointed director and confirmed in July 2013.

The National Consumers League (NCL) applauds the CFPB on its very successful five years of protecting consumers in financial markets and will continue to support the CFPB in its efforts to crack down on the abuse and deception of consumers. NCL would like to take this opportunity to highlight some of the great work that the CFPB has accomplished thus far, specifically:

  • The CFPB created the Consumer Complaint Database that allows the CFPB to send complaints about financial products and services to companies for response on the consumer’s behalf. The complaints received by the CFPB are published on the agency website after the company responds, or after 15 days. The CFPB thus allows consumers to be heard–by other consumers, banks, debt collectors, and others under the agency’s jurisdiction. This process gives consumers a voice which helps to improve the marketplace. 
  • The CFPB has proposed restrictions on the use of forced arbitration clauses in consumer financial contracts.  It aims to prohibit financial companies from using these clauses to block class-action lawsuits; forced arbitration clauses take away the right of consumers to seek relief and hold companies accountable when they have engaged in corporate wrongdoing. The CFPB proposal will help even the playing field for consumers in their interactions with financial institutions. 
  • The CFPB proposed a rule to end payday debt traps that would require lenders to determine whether consumers have the ability to repay payday, auto title, and certain other high-cost loans. The CFPB is concerned that consumers are being set up to fail with loan payments that they are unable to repay. This proposed rule would protect consumers from falling into the trap of paying off payday loans by taking out another loan they cannot afford, thus creating piling debt upon debt and creating a vicious cycle of impossible-to-pay-back predatory loans.
  • The CFPB is considering a proposal to overhaul the debt collection market where new protections would limit collector contact and help ensure the correct debt is collected.  Debt collection companies would be required to have more and better information about the debt before they collect. Companies would be required to limit communications, clearly disclose debt details, and make it easier to dispute the debt they purport to collect.  Debt collection generates more complaints to the CFPB than any other financial product or service. The proposal would increase consumer protections.
  • The “Know Before You Owe” program is a mortgage initiative designed by the CFPB to help consumers understand their loan options, shop for the mortgage that’s best for them, and avoid costly surprises at closing. The Know Before You Owe disclosure rule replaces four disclosure forms with two new, less complicated ones. The CFPB also provides consumers with tips and checklists to help avoid foreclosure and understand mortgage statements. Additionally, the CFPB recently proposed a rule that expands foreclosure protection by providing surviving family members and other homeowners with the same protections as original borrowers.

NCL thinks this is a very impressive track record of accomplishments over a mere five years. Hats off to the excellent staff at the CFPB, which includes many devoted civil servants looking to make the marketplace fairer and more equitable for consumers. And most of all, thank you to Richard Cordray for enduring the slings and arrows of some members of the corporate community, who have had little positive things to say about the work of the CFPB. Consumers owe the professionals at this federal agency a debt of gratitude for carrying out their mission–protecting consumers from unfair and abusive financial practices–with determination, purpose and effectiveness. Happy 5th Anniversary to the CFPB.