- The CFPB has pursued actions against Toyota Motor Credit, Comerica, Cash App, among others, over the years.
- This agency emerged from the mortgage crisis.
For many years, I advised consumers facing issues with auto loans, mortgages, credit cards, payment apps, student loan servicing, credit reports, and more to contact the Consumer Financial Protection Bureau and file a complaint.
It’s the primary federal entity for reporting financial fraud, hidden fees, scams, and predatory practices. A comprehensive resource for protecting consumers and ensuring fair treatment from banks, lenders, and other financial entities.
However, that has abruptly changed just last week. Can you hear that? It’s the sound of countless complaints that Wall Street and major banks would relish discarding into a digital wastebasket under the Trump administration.
Brace yourself for disputes about who is misusing funds and perpetuating fraud more — a government body established by Congress in 2010 or entities within the financial sector, including large banks, money apps, mortgage firms, and others.
After a chaotic few days filled with emails and secrecy, the Trump administration announced the closure of the Consumer Financial Protection Bureau on Monday morning.
Need a break? Try out the USA TODAY Daily Crossword Puzzle.
Not a fan of waste? Who isn’t? However, I never expected an upset parent to toss a functioning refrigerator to the curb after weeks of discarding rotten food and spoiled vegetables. Frustrated? Certainly, but you don’t eliminate big-ticket appliances to resolve minor annoyances.
Abolishing the CFPB isn’t a sketch for “Saturday Night Live,” unlike President Trump’s recent executive order on February 10 terminating the “procurement and forced use of paper straws.”
The White House fact sheet claims: “The irrational crusade against plastic straws has compelled Americans to adopt nonfunctional paper straws. This will cease under President Trump.”
I’m willing to take a risk here by saying I’ve never favored paper straws.
Dismissing an independent agency established to protect consumers financially goes completely against much of what I’ve learned throughout my career.
Read more:Is Trump helping or harming Americans by freezing the Consumer Financial Protection Bureau?
The future of the CFPB is uncertain. Last Tuesday, Trump did announce he plans to nominate former FDIC board member Jonathan McKernan as the new director of the Consumer Financial Protection Bureau, a move that many bankers welcomed.
The Consumer Bankers Association expressed eagerness to collaborate with McKernan, should he be confirmed, expecting he would “reverse many recent actions” taken by the CFPB during the Biden administration.
“The CFPB often stretched or outright ignored the clear directives of its legal authority to further overt political objectives,” stated a Consumer Bankers Association white paper regarding “reforming the CFPB.”
The American Bankers Association also praised McKernan’s choice, emphasizing that his nomination could signify a pivotal moment to steer the CFPB in a “new direction.”
So, although the CFPB has ceased its operations this week and likely for an extended period, it is also plausible that the agency could resume functionality under new leadership.
Regardless, many consumer advocates remain apprehensive.
“This agency impacts all of our lives,” stated Lauren Saunders, associate director for the National Consumer Law Center.
Saunders pointed out numerous ways the CFPB has tackled issues ranging from scams to deceptive practices in financial products. Now, she adds, “it’s a mystery” what the future holds as many lawsuits filed by the CFPB hang in uncertainty.
Before the CFPB’s establishment, many complications regarding intricate financial products went largely unaddressed.
“If a mortgage failed, almost no one paid attention.”
One of the recent initiatives involved removing medical debt from credit reports.
Consumers have consistently reported “receiving mistaken bills or being demanded payment for charges that should have been covered by insurance or financial aid programs,” according to the CFPB.
Recently, the CFPB also tackled a loophole that allowed credit card companies to impose increased late fees. Yet, that attempt to decrease late fees on credit cards from $30 or $41 to $8 was halted following legal challenges from banking industry associations.
Consumers have faced challenges with several poor products
While it may be convenient to place blame on millions of consumers who lost their homes to foreclosure for overextending themselves or ignoring the fine print, it’s critical to remember that it’s not entirely consumer error.
Wall Street and major banks significantly contributed to orchestrating a credit crisis that nearly brought down the U.S. financial system.
I personally experienced this as a columnist for the Detroit Free Press, where I documented the financial distress felt in Michigan throughout the crisis.
The credit crisis, which started in the summer of 2007 in the mortgage sector, rapidly escalated into a broader economic downturn. Even individuals who refrained from taking loans faced losses as their property values plummeted and 401(k) accounts collapsed.
The dire situation prompted drastic measures, like the $700 billion financial rescue plan enacted by President George W. Bush in October 2008. Economists warned that without assistance to Wall Street, the crisis would worsen and lead to even more job losses. Action was essential to address the extensive bad mortgage debt.
A necessity, not a luxury
The financial sector has consistently opposed the existence of the Consumer Financial Protection Bureau, which was founded to combat mortgage lending abuses as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
“We estimate that 7 million homeowners faced foreclosure partly due to those abuses,” mentioned Mark Zandi, chief economist for Moody’s. Zandi authored “Financial Shock: A 360 Degree Look at the Subprime Mortgage Implosion,” published in 2008.
Zandi noted that the CFPB’s oversight extended beyond mortgages to inclusion of other consumer lending areas, like payday loans, “buy now, pay later” loans, and subprime auto loans.
“Although many lenders may resist the CFPB’s oversight, and while there are pros and cons associated with it, overall I believe the CFPB has had a positive impact on both borrowers and lenders,” Zandi stated.
The agency ensures accountability for the most aggressive and irresponsible lenders, aiming to promote sustainable borrowing practices.
It was evident back then — as it remains now — that many consumers lack protection when there is no consumer watchdog empowered to address violations of financial regulations, including scams and hidden charges.
“The CFPB’s fundamental mission is to safeguard American consumers from exploitation,” remarked Donald Moynihan, J. Ira and Nicki Harris family professor of public policy at the Gerald R. Ford School of Public Policy at the University of Michigan.
Trump lacks the authority to abolish the agency, which Congress established, yet the recent actions taken by the administration suggest a desire to do precisely that.
“Instructing employees to halt work and remain home, as Russ Vought has done, is not just a massive waste; it’s also a covert attempt to shut the agency down,” Moynihan explained to the Free Press.
Vought, newly confirmed as the head of the Office of Management and Budget and acting director of the CFPB, informed the agency’s employees to effectively stand down, suspend pending investigations, and refrain from performing their duties.
Vought is instrumental in reshaping the federal government, advancing Trump’s policies, and propelling the conservative recommendations outlined in Project 2025.
Even in the event the CFPB is not dismantled — which could happen following legal challenges — there is a significant risk that consumers will see an agency under the Trump administration that may overlook financial misconduct.
Michigan Attorney General Dana Nessel emphasized that the CFPB wields federal authority to “hold wrongdoers accountable.”
According to her, the agency utilizes its power to “protect Americans from deceptive charges and practices that drain millions from working families, unfair contractual stipulations that entrap consumers in poor agreements, and financial products such as dubious auto loans, predatory mortgages, and fraudulent bank accounts designed to gouge borrowers in favor of the wealthy.”
For years, numerous Republican officials and interest groups have aimed to terminate the CFPB. In May 2024, the U.S. Supreme Court upheld the funding structure of the Consumer Financial Protection Bureau.
The CFPB receives funding through the Federal Reserve — established to insulate it from political pressure — and does not participate in Congressional budget disputes. Critics labeled this structure as potentially unconstitutional.
“I lack confidence that the CFPB will maintain vigorous enforcement against financial institutions, primarily if those institutions support the president,” Moynihan noted.
“Should it persist, the agency’s mission is likely to shift toward protecting financial institutions from what Trump perceives as overregulation. Consumers risk losing one of their most formidable advocates within the government,” he warned.
Securing relief for consumers
During Trump’s first administration, acting director Mick Mulvaney received backlash for seemingly undermining the agency from late 2017 until late 2018. Nevertheless, there was not this level of hostility aimed at shutting the agency entirely.
Historically, the independent federal agency has undertaken significant enforcement measures propelled by consumer complaints and investigative journalism.
The CFPB has helped secure over $21 billion in relief for consumers, which includes monetary compensation, reduced principal payments, forgiven debts, and additional consumer relief activities.
The agency has imposed over $5 billion in civil penalties on businesses and individuals violating the law.
I have covered numerous cases, including a situation in 2023 where Toyota auto buyers reported facing challenges in canceling additional insurance products that inflated their monthly payments after securing auto loans through the company’s financing department.
In 2023, the CFPB mandated Toyota Motor Credit to pay $48 million to affected consumers.
The order included a requirement for Toyota Commercial Credit to contribute a $12 million penalty to the consumer bureau’s victim relief fund.
“Hotline representatives were instructed to continue promoting products until a consumer requested cancellation verbally three times. Only then would they explain that cancellation required a written request,” as stated by the CFPB in 2023.
In 2012, the new federal regulatory body held a town hall at the Detroit Institute of Arts, drafting new regulations for the oversight of major credit reporting agencies and debt-collecting firms. Many consumers conveyed difficulties in correcting errors on their credit reports and relayed unsettling experiences with overly assertive debt collectors.
During that town hall, I encountered Carol Long, then 65, who shared with attendees that she had mistakenly been labeled “deceased” on her credit report after obtaining a copy in January 2012.
“I believe they confused me with another Carol,” said Long, a resident of Grand Blanc. Despite being informed the issue was rectified that spring, when she attempted to refinance in summer 2012, she again found herself listed as “deceased.”
We also heard a story from Detroit about a young man who struggled to get a mortgage due to his credit report’s inaccurate reflection of his father’s tax issues.
Such genuine issues often required federal regulation and oversight for proper resolution.
The CFPB initiated direct supervision of firms like Equifax, TransUnion, and Experian in September 2012, aiming to ensure the reliability and accuracy of the information they provided.
As a journalist, I’ve been contacted by consumers reporting a variety of challenges, including losing funds to scams and deceit through payment apps such as Zelle.
Simultaneously, financial institutions have claimed that the CFPB has been “overstepping its authority.” This phrase became increasingly common last year following Trump’s victory and the CFPB’s ramped-up enforcement actions and lawsuits toward the end of President Biden’s administration.
In December, the CFPB filed a lawsuit in the U.S. District Court for the Northern District of Texas against Comerica for “systematically neglecting” its 3.4 million Direct Express cardholders, most of whom are unbanked Americans.
In its response to the Detroit Free Press, Comerica indicated it has instituted legal action against the CFPB on November 8, disputing the bureau’s regulatory overreach and how it approached the situation.
The Dallas-based bank, which has strong ties to Detroit, lost its 16-year contract with the federal government involving the Direct Express card in November 2024. Comerica later affirmed its commitment to continue “vigorously defend our history as the financial agent for the Direct Deposit program, focusing on serving our cardholders.”
In late December, the CFPB took legal action against Bank of America, JPMorgan Chase, and Wells Fargo for failing to shield consumers from widespread fraud prevalent in the popular peer-to-peer payment service. The independent agency also sued Early Warning Services, the operator of Zelle.
“The platform they created turned into a haven for criminals,” remarked Rohit Chopra, then-CFPB director, in December. He asserted that key financial institutions neglected to address significant vulnerabilities within the system while marketing Zelle’s near-instant digital money transfers as secure.
Early Warning Services, in charge of Zelle, is co-owned by seven major banks: Bank of America, Capital One, Chase, PNC Bank, Trust, U.S. Bank, and Wells Fargo. It functions as a financial technology and consumer reporting organization based in Scottsdale, Arizona.
Banking institutions defended Zelle’s security, asserting the CFPB was overextending its reach in its actions.
In January, the CFPB sued Experian, a nationwide consumer reporting agency, for unlawfully failing to adequately investigate consumer grievances.
The CFPB contends that Experian “does not implement sufficient procedures for intake, processing, investigating, and notifying consumers regarding their disputes, leading to the inclusion of incorrect data on credit reports.”
Such inaccuracies can have severe repercussions for those seeking car loans, mortgages, or other avenues to improve their financial situation. “Inaccurate or false information on consumer reports can jeopardize access to credit, employment, and housing,” the CFPB emphasized.
Many might anticipate receiving a settlement this spring from Cash App, though uncertainty persists regarding how that process will unfold now that the CFPB appears dormant. Cash App faced liabilities up to $120 million for refunds and other compensation to affected clients, in addition to $55 million in penalties, concerning its mishandling of customer service and rise in fraudulent activities.
‘Page not found’
Last week, I visited ConsumerFinance.gov and found nothing. Just a 404 error: “page not found.” It’s an unsettling experience to witness a government site seemingly disappear.
I say “seemingly” because, oddly, some sections remained accessible, such as one for “consumer education,” providing information on auto loans and other offerings. You could even scroll down to file a complaint through those tabs.
Nonetheless, it felt highly improbable that anyone would address your complaint during this time.
(This story has been updated to include new information.)
Contact personal finance columnist Susan Tompor at: [email protected]. Follow her on X @tompor.
