Strengthening State Consumer Protections: A Call to Action for Today

Under Rohit Chopra, the CFPB's report urges stronger state consumer protections amid corporate exploitation, but Republican moves threaten its funding and impact.

Under Rohit Chopra’s leadership, the Consumer Financial Protection Bureau (CFPB) issued a pivotal report aimed at bolstering state-level enforcement of consumer protection laws.

However, soon after his departure, President Trump appointed Treasury Secretary Scott Bessent as acting director, who swiftly shut down the CFPB’s operations.

In a memo to staff, Bessent ordered the suspension of ongoing litigations, enforcement actions, and any rule-making efforts.

Meanwhile, Republican lawmakers are strategizing to cut the bureau’s funding linked to the Federal Reserve.

State Consumer Protections

Chopra’s tenure at the CFPB reached its conclusion with the release of this report, which laid out a framework to reinforce state consumer protections, a movement that had started in various states during Trump’s first term.

Released in mid-January, just before Trump assumed office, the report underscores the critical role that states have historically played in consumer protection.

It calls for a renewed commitment to these efforts amid shifting economic circumstances.

The report notes that enforcement of consumer laws has often been a collaborative effort between state and federal authorities, with states frequently leading the way.

Over the past century, states have had to adapt their standards of fair treatment in response to evolving market dynamics.

It advocates for updates to state laws governing unfair or deceptive acts and practices (UDAP) to tackle contemporary challenges.

Corporate Concentration and Consumer Exploitation

One key issue raised is the increasing corporate concentration, which leads to new forms of consumer exploitation.

Large corporations, armed with skilled legal teams, employ complex strategies—such as convoluted product terms—to maximize profits at consumers’ expense.

The report also highlights how technological advancements have opened doors for fraud and deception.

Companies often use forced arbitration to select favorable private judges, avoid injunctions, maintain confidentiality, and obstruct consumer defenses against unlawful practices.

The report presents six main recommendations for state action.

First, it urges changes to state laws to ban abusive practices that obscure product details or exploit power imbalances.

Second, it calls for enhanced investigative powers for state attorneys general to pursue consumer remedies more effectively.

Additionally, the report suggests removing procedural barriers so that plaintiffs aren’t required to prove individual financial harm when seeking private rights of action, extending consumer protection laws to also benefit businesses.

Further recommendations include creating mechanisms for private enforcement that remain effective despite forced arbitration and banning exploitative practices such as excessive fees and misuse of personal data.

Towards a Stronger Consumer Protection Framework

The report envisions a simplified framework for states to enforce federal consumer protection laws, noting that the Consumer Financial Protection Act (CFPA) sets basic standards while allowing states to implement stricter regulations.

Congress recognized that state actions can serve as crucial indicators for potential federal intervention.

As economic landscapes shift, the report stresses the importance of addressing emerging technological concerns and warns about the growing influence of a handful of corporations over consumers’ daily lives.

Drawing from Alexis de Tocqueville’s 19th-century observations about a potential “industrial aristocracy,” the report cautions that fewer competing firms can lead to consumer coercion, resulting in lower-quality services and inflated prices.

A 2024 report on credit card companies revealed that smaller issuers generally provided better terms for consumers than larger ones.

The misuse of consumer data and the rise of “junk fees” are highlighted as pressing issues that necessitate protective measures, particularly as companies exploit fine print to sidestep state laws.

In conclusion, the report argues that now is the time to strengthen state-led consumer protection initiatives.

Since its inception, the CFPB has supported these efforts, continuing a legacy that echoes the historical work of the Federal Trade Commission in the 1970s.

The report offers detailed recommendations designed to empower states and enhance their consumer protection frameworks.

Source: Housingwire