The Consumer Financial Protection Bureau yesterday released a pair of reports, one detailing how states can better align their laws with the evolving challenges in consumer protection and the other a compendium of guidance it has released in recent years. As markets become more complex, particularly with the rise of technology, sensitive data exploitation, and new business practices, the report underscores the need for modernizing state-level consumer protection regulations.
Key recommendations:
The CFPB’s report offers concrete recommendations for state lawmakers to update consumer protection statutes. Among these are the incorporation of “abusive” practices into state laws to prevent companies from using their market power to obscure product features or manipulate consumers. It also suggests measures to combat emerging risks such as junk fees and data privacy abuses.
To empower state enforcement, the report advises states to:
- Provide stronger investigative tools for Attorneys General,
- Eliminate the requirement to prove individual monetary harm for private claims, and
- Enable private enforcement to remain effective despite the rise of forced arbitration clauses.
Federal-State collaboration: The CFPB has worked closely with state regulators, including filing joint lawsuits with state attorneys general against companies whose practices cross state borders. This cooperation has been critical in addressing deceptive practices that are difficult for individual states to tackle alone.
The report also highlights how the CFPB has pushed back against unwarranted preemption of state laws, particularly in areas like credit reporting and small business lending, where states have historically been more proactive in consumer protection.
The compendium: Alongside the state-focused report, the CFPB released a comprehensive Compendium of Recent CFPB Guidance. This document consolidates the agency’s guidance on emerging issues in the consumer financial services market, including the use of artificial intelligence, privacy concerns, and evolving data practices. This compendium reflects the CFPB’s interpretation of federal consumer financial laws, which include prohibitions on unfair, deceptive, or abusive acts under the Consumer Financial Protection Act (CFPA).
The compendium includes guidance on a range of topics such as:
- Fair Credit Reporting practices, particularly around name-only matching,
- The growing use of artificial intelligence in consumer credit decisions, and
- Rules surrounding medical debt collection and consumer reporting under the No Surprises Act.
Looking ahead: As the CFPB continues to refine its role in overseeing consumer financial markets, the report serves as a blueprint for states to strengthen their own consumer protections. These efforts are critical as companies adapt to the digital age, and consumers face increasingly sophisticated predatory practices.
