Lawsuit Takes Aim at Consumer Financial Protection Bureau (CFPB)

As many Chicago-area residents know, the Consumer Financial Protection Bureau (CFPB), which was created six years go, provides numerous protections to consumers who have been victimized by debt collection companies practicing fraudulent or unfair debt collection practices. Yet, according to a recent article in USA Today, a recent lawsuit has in some ways proven to be a win for the banking industry. In brief, the ruling resulted from a lawsuit brought by a mortgage lender that previously had been fined $109 million by the CFPB “argued that the bureau’s structure placed unconstitutional power in the single director.” Commentators have suggested that the mortgage lender aimed to shut down the CFPB altogether. Instead, the D.C. Circuit Court of Appeals, where the case was heard, made a change to the way the directorship of the CFPB works.
CFPB Has Helped Millions of Consumers Over the Last Several Years
While articles in Forbes and other news sources that often favor the financial industry have argued that the recent lawsuit is a victory (for the banks and for the financial industry), the article in USA Today emphasizes that we should all recall the victories of the CFPB before looking for ways to dismantle it. Some of those accomplishments in just six years include:
  • Fining banks and creditors that engaged in deceptive or abusive practices, and supplying money from the fines as relief for injured consumers. Examples of substantial fines and settlements include $100 million from Wells Fargo for creating fraudulent accounts, and $11.7 billion from credit card companies, banks, and mortgage lenders. In all, the CFPB has provided relief for more than 27 million consumers.
  • Establishing a “consumer complaint” website to streamline the investigation process into alleged abusive lending and debt collection practices. The CFPB created a website through which consumers can log complaints, and through which consumers can see the names of agencies that have been cited or flagged.
  • Creating more transparency in the process of securing mortgage loans, auto loans, and student loans. In the last six years, the CFPB has provided information about how loans impact consumers and has “added disclosure rules that protect consumers in every phase of buying a home.”
Details of the Recent Lawsuit
The recent court decision concerning the CFPB is important for Oak Park consumers to be aware of because it suggests a desire to limit the power of the CFPB. What did that court rule specifically? It determined that the CFPB as it currently stood at the time of the lawsuit was “unconstitutionally structured because it is an independent agency headed by a single Director.” While the court found, in some respects, for the mortgage lender, its ruling will not substantially impact the CFPB’s day-to-day abilities. The court decided to “simply sever the statute’s [the Dodd-Frank Act] unconstitutional for-cause provision from the remainder of the statute,” thereby providing the President of the United States with “the power to remove the Director at will, and to supervise and direct the Director.”
As such, the court highlighted, “[t]he CFPB therefore will continue to operate and to perform its many duties, but will do so as an executive agency akin to other executive agencies headed by a single person, such as the Department of Justice and the Department of the Treasury.” In brief, the CFPB will continue its operations, and will persist in its efforts to penalize creditors that do not treat consumers fairly and according to the terms of the Fair Debt Collection Practices Act (FDCPA).
Contact an Oak Park Consumer Protection Lawyer
If you have questions about filing a claim under the FDCPA, an experienced Oak Park consumer protection attorney can assist with your case. Contact the Emerson Law Firm today.
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