CFPB Issues Interpretive Rule Regarding the Authority of States to Enforce Federal Consumer Protection Laws

On May 19, 2022, the Consumer Financial Protection Bureau (“CFPB”) issued an interpretive rule (“Rule”), clarifying the authority of States to address violations of Federal consumer financial laws. The Rule welcomes states to bring actions in federal court based on violations of the Consumer Financial Protection Act of 2010 (“CFPA”), as well as federal lawsuits based on violations of such “enumerated consumer laws,” as the Fair Credit Reporting Act and the Truth in Lending Act, enforced by the CFPB.

As CFPB Director Rohit Chopra noted in his announcement of the Rule, “[i]n the years leading up to the financial crisis, federal regulators undermined states seeking to protect families and businesses from abuses in the mortgage market.” The CPFB’s issuance of the Rule demonstrates its “commitment to promoting state enforcement, not suffocating it.” Generally, the Rule clarifies that States may:

• Enforce the CFPA, including the provision making it unlawful for persons or service providers to violate any provision of federal consumer financial protection law;

• Pursue claims and actions against a broad range of entities, including those who are not themselves covered persons or service providers under the CFPA;

• Bring enforcement actions in coordination with the CFPB or to stop or remediate harm that is not addressed by an CFPB enforcement action.

A copy of the CFPB’s interpretive rule can be found HERE.