CFPB Adopts New Enforcement Principles

The CFPB has adopted new Enforcement Principles designed to roll back standards used by the Biden Administration.

The bureau recently applied the new principles in attempting to ensure that customers affected by Bilt’s transition of its credit card services to a new bank partner were not harmed by the change. The CFPB stated that “[h]ere, instead of initiating a protracted investigation, followed by a public enforcement action, which could be litigated for years before consumers get any redress, as the Biden CFPB would have done under the former Director Chopra, this leadership engaged with Bilt directly and collaboratively. This meant that within weeks of the meeting [between the CFPB and Bilt], additional consumers were already receiving redress.”

The CFPB also stated that “[f]ollowing our discussions and at our direction that Bilt ensures full redress, Bilt notified the CFPB that they proactively reached out to the limited number of potentially-affected customers and offered to reimburse them for any overdraft fees, late fees, or insufficient funds fees related to the transition.”

Protect Borrowers had previously sent a letter to the bureau urging it to “immediately engage in risk-based supervision of all covered parties … and, where appropriate, to take any public enforcement actions necessary to uphold the law and protect borrowers. But the CFPB followed its new enforcement policy instead.

The new Enforcement Principles have four main components: addressing actual harm to consumers, due process, collaboration and efficiency and are as follows:

• Addressing Actual Harm to Consumers: CFPB focuses its enforcement on addressing actual harm to consumers. When an institution violates the law and causes real and meaningful harm to consumers, the CFPB uses its enforcement authority to ensure that violations are remedied and consumers are made whole. CFPB will not take action in cases in which it believes consumers simply made unwise decisions, or cases involving theoretical or highly speculative harm.
• Due Process: All Americans are entitled to know what the rules are before they are enforced against them, and the CFPB will ensure its enforcement actions comport with this basic tenet of due process.” CFPB enforcement actions are rooted in a clear grant of statutory authority or a regulation promulgated through notice and comment. The CFPB does not seek to stretch the bounds of its statutory authority through novel interpretations or advance a policy agenda through its enforcement actions.
• Collaboration: The CFPB is charged with taking appropriate enforcement action to address violations of Federal consumer financial law, including filing public enforcement actions when appropriate. But not all situations require an adversarial process and the pursuit of an enforcement action. The CFPB seeks to collaborate with institutions to remedy legal violations voluntarily and make consumers whole for any harm they have suffered. Institutions who self-report violations will not be unnecessarily punished for their candor and willingness to proactively address problems. This approach maximizes the benefit to consumers, and ensures any harm can be addressed quickly, instead of waiting years for the resolution of litigation. In any event, the CFPB will take no more time than necessary to arrive at a fair resolution that accounts for the interests of consumers, institutions, and the CFPB. 
• Efficiency: CFPB is committed to maximizing its resources and operating efficiently. In addition to pursuing a more collaborative approach to addressing issues, the CFPB also refrains from engaging in duplicative enforcement work. CFPB does not pursue an enforcement action where the states or other regulators are better suited to do so,” according to the new principles. CFPB does not undertake such actions, or engage in joint actions, to run up its number of enforcement actions or in pursuit of good press coverage.