On November 29, the Consumer Financial Protection Bureau (CFPB) settled a lawsuit by the National Association of Consumer Advocates (NACA) challenging the formation and operation of the Taskforce on Federal Consumer Financial Law (the Taskforce). The Taskforce was formed in October 2019 by then-CFPB Director Kathy Kraninger to examine the existing consumer financial services legal and regulatory environment, and to report the Taskforce’s recommendations for improving and strengthening consumer financial laws and regulations. In January 2021, the Taskforce released a two-volume report of its recommendations, some of which included:
- Authorizing the CFPB to issue licenses to nondepository institutions that provide lending, money transmission, and payments services;
- Considering the benefits and costs of preempting state law where conflicts can impede the provision of products and services, such as the regulation of fintech companies engaged in money transmission;
- Identifying competitive barriers and making appropriate recommendations to policymakers and regulators for expanding access to the payments systems by nonbank providers;
- Exercising caution (a recommendation for the Bureau, Congress, and other federal and state regulators) in restricting the use of nonfinancial alternative data; and
- Imposing monetary award limitations on class actions under the Fair Credit Reporting Act (FCRA).
NACA filed its lawsuit in June 2020, alleging that the CFPB violated the Federal Advisory Committee Act (FACA) in the formation and operation of the Taskforce by, among other things, failing to meaningfully consult with the General Services Administration and failing to post preliminary findings in the Federal Register. The CFPB fought the lawsuit during former Director Kraninger’s tenure, but in the settlement, the CFPB now admits that the Taskforce was subject to FACA and that the CFPB failed to comply with FACA’s requirements. In the settlement, the CFPB also agreed to release certain Taskforce records and to put a disclaimer on the report that it was developed in violation of FACA.
The CFPB’s near-180-degree shift on the Taskforce and its report give an indication of the CFPB’s willingness, under current Director Rohit Chopra, to distance itself from its work in the Trump administration. It’s worth keeping an eye on what else the CFPB seeks to change about its past as Director Chopra continues to spread his influence at the Bureau.