States and municipalities across the country are taking steps to fill in where they think the Consumer Financial Protection Bureau has retreated from its positions of aggressively seeking to protect consumers, and those moves are likely to impact the credit and collection industry. The departure of the federal government from consumer protection enforcement has not resulted in a regulatory vacuum. In fact, it’s caused a state-level surge.
Why it matters: With the federal government under the Trump administration cutting back enforcement actions, halting staff operations at the CFPB, and abandoning pending lawsuits, state and city leaders are rushing to plug the regulatory gap. And they’re bringing new tools and aggressive postures that will directly affect debt collectors, lenders, and financial services providers.
Pennsylvania’s Response
Pennsylvania Governor Josh Shapiro announced the creation of a centralized hotline, email, and website to help residents report scams and financial concerns. The initiative, launched explicitly in response to perceived federal inaction, seeks to:
- Investigate predatory lending and deceptive practices
- Coordinate enforcement across state agencies
- Expand consumer education efforts
“Now, as federal oversight and efforts to protect consumers — especially from the CFPB — decline, the Shapiro Administration is stepping up,” state officials said.
The state also plans to utilize the enforcement authority granted under the Dodd-Frank Act, empowering regulators to act even when federal agencies do not.
New York City’s Game Plan
NYC Comptroller and mayoral candidate Brad Lander unveiled a sweeping consumer protection agenda, stating that Trump’s rollback of the CFPB has created “open season” for fraudsters. His plan includes:
- Curbing junk fees and predatory lending
- Buying back medical debt
- Expanding local oversight over deceptive student loan practices and “earned wage access” schemes
- Empowering the NYC Department of Consumer and Worker Protection (DCWP) with more resources and legal authority
Lander also proposed a public complaint database and a private right of action for consumer violations, which are changes that would both increase transparency and litigation risk for businesses operating in the city.
California’s Legislative Push
California lawmakers are also moving forward with legislation to expand enforcement under the state’s Consumer Financial Protection Law. Proposed measures would:
- Give regulators new powers over state-chartered financial institutions
- Crack down on unfair, deceptive, and “abusive” practices
- Enforce transparency and privacy protections for digital and social platforms
Bills like SB 825 and AB 801 reflect a growing belief that state regulators must now serve as the first line of defense for consumer protection.
