Ten Ways the Consumer Bureau Stops Predatory Lending

By Nadine Chabrier, Senior Policy & Litigation Counsel

In just a few days, the Supreme Court may announce it will consider a lawsuit that poses an existential threat to the Consumer Financial Protection Bureau (CFPB). In this context, it’s worth considering how badly needed the consumer bureau is. The CFPB was established because unrestrained predatory lending decimated our economy and wreaked havoc on people’s lives. Since it opened in 2011, the CFPB has been our watchdog on Wall Street.

Let’s look at ten of the (many) ways that the consumer bureau stops predatory financial practices and gets money back for consumers who have been cheated:

1. Curbing credit card fees: The CFPB secured $2 billion in monetary relief for consumers through enforcement actions against credit card companies for charging for add-on services, such as credit monitoring, that were deceptively marketed as free or were never provided. These actions also helped deter companies from this harmful practice, saving consumers billions. Separately, the CFPB recently proposed a rule that would lower the limit on late fees from $41 to $8.
2. Taking on repeat offenders: The CFPB ordered Wells Fargo to pay $2 billion in monetary relief to consumers who were harmed by the bank’s widespread overcharging on and mismanagement of auto loans, mortgages, and deposit accounts. The CFPB also required Wells to change its practices moving forward, including by refunding auto loan borrowers for the unused portion of GAP contracts.
3. Combatting discrimination: The CFPB has secured the largest-ever court settlements over discrimination in the auto, credit card, and mortgage markets. In addition, the consumer bureau has made clear to industry that financial discrimination that falls outside of fair lending laws, such as in opening a bank account, is also illegal and it will monitor for these violations.
4. Protecting students: The CFPB has cracked down on companies that abuse student borrowers. This includes enforcement actions against for-profit colleges Corinthian and ITT Tech, which were deceiving students about job prospects, and loan servicer Navient, which engaged in widespread fraudulent practices. CFPB work helped lead to debt cancelation for over half a million borrowers harmed by Corinthian and ITT Tech. The consumer bureau also has a private education loan ombudsman to expose issues in this market.
5. Protecting borrowers from predatory mortgages: The consumer bureau has successfully implemented reforms that protect borrowers from avoidable foreclosure. A central component of this is a CFPB rule that prevents lenders from trapping borrowers in unaffordable mortgages – which were at the epicenter of the 2008 Financial Crisis.
6. Protections from predatory overdraft fees and prepaid cards: The CFPB has issued guidance that bans unfair surprise overdraft fees. This will stop financial institutions from charging people an overdraft fee on a debit card purchase even when there were sufficient funds in the checking account at the time the debit card was swiped. Consumers will save $1 billion because of this action. Separately, the CFPB issued a rule that establishes protections for users of prepaid cards, including digital wallets, in case a card is stolen, lost, or wrongly charged. The rule ensures consumers won’t be charged for monitoring their account. It also requires clear, up-front information on product fees, so people can comparison shop.
7. Protecting the military community: The CFPB has an Office of Servicemember Affairs with staff that have gone to military installations across the country as part of supporting servicemembers, veterans, and military families in the consumer finance market. The CFPB has secured monetary relief for members of the military community who have been preyed upon by various companies, such as a military allotment processor that charged hidden fees.
8. Stopping abusive debt collection: The CFPB wrote rules that, for the first time, added teeth to the Fair Debt Collection Practices Act. It has taken enforcement actions against debt buyers and debt collectors for deceptive tactics, collecting on debts that aren’t owed, threatening to arrest debtors, and other abuses. Their actions have provided many consumers with relief and ended harmful practices like companies “churning out lawsuits using robo-signed court documents.”
9. Researching financial practices: Research is essential for informed policymaking. The CFPB has produced groundbreaking reports on “Buy Now, Pay Later,” private student loans, reverse mortgages, and various types of short-term credit.
10. Responding to consumer complaints: CFPB relays consumers’ complaints to their financial company. Where complaints previously received deafening silence, CFPB almost always gets a response from the company – sometimes with monetary or non-monetary relief. CFPB publishes a Complaint Database that gives voice to consumer experiences. This transparency encourages companies to compete based on how well they treat their customers. To file a complaint, go to https://www.consumerfinance.gov/complaint/.

Around a decade ago, Americans lost trillions in wealth due to predatory lending and the economic downturn it caused. A painful lesson was that we need a government agency to protect our pocketbooks from unscrupulous financial conduct. Even as challenges play out in our courts, the consumer bureau remains focused and continues to do this job.