Supreme Court Set To Rule On Consumer Financial Protection Bureau Funding
The Consumer Financial Protection Bureau (CFPB) is a federal agency that protects consumers from unfair, deceptive, and abusive business practices. They file lawsuits against businesses that break the law as well as performing outreach for consumers to ensure that they are kept abreast of all the latest scams.
In October 2023, the U.S. Supreme Court heard arguments regarding the constitutionality of the agency’s independent funding structure. SCOTUS will decide whether the CFPC succeeds next year in reshaping how banks manage customer data and charge fees.
Under the proposed rules, consumers would have an easier time sharing their financial data and switching banks. There would also be caps on credit card fees under the final rules the CFPB plans to issue in 2024. The CFPB has also started drafting rules that would restrict fees for overdrafts and insufficient funds while redefining the credit reporting industry.
Amid all these efforts to make the marketplace fairer for consumers, there is heavy pushback from the banking industry. The Supreme Court will rule on one case that challenges the CFPB’s independent funding mechanism through the Federal Reserve. A second lawsuit could make it easier to challenge any federal agency’s rules in court.
CFPB v. Community Financial Services Association of America
In October, the Supreme Court heard oral arguments in CFPB v. Community Financial Services Association of America. This case emerged out of the US Court of Appeals for the Fifth Circuit. The appeals court ruled that the CFPB’s independent funding violates the Constitution’s appropriations clause. The CFPB currently gets its funding directly from the Federal Reserve. Most other agencies are required to go through the annual congressional appropriations process.
At present, the belief is that enough conservative justices have expressed skepticism about the Fifth Circuit’s ruling that many believe that CFPB’s funding will continue directly from the federal receive.
If SCOTUS does find in favor of the CFPB, it will impact how payday lenders access customer bank accounts. The Fifth Circuit ruled that the CFPB appropriately followed administrative procedures when issuing the rule, and the Supreme Court declined to hear arguments concerning that matter.
Other matters that would be impacted by the Supreme Court’s ruling include a rule mandating the collection of demographic data for small business borrowers. This rule has been put on hold pending the outcome of the CFPB funding case. Lenders are hoping to get rid of the rule and will likely launch a procedural challenge should the existing stay end.
The Supreme Court could still rule against the agency’s funding without it impacting its previous rules and enforcement actions. It could also declare the agency’s past efforts to be entirely invalid. In either case, it would be up to Congress to fund the CFPB in the future.
Talk to an Ohio Consumer Fraud Attorney Today
Kohl & Cook Law Firm, LLC represents the interests of Ohio residents filing consumer fraud actions against local businesses. Call our Columbus consumer lawyers today to schedule an appointment, and learn more about our services.
Source:
news.bloomberglaw.com/banking-law/supreme-court-decisions-loom-over-consumer-watchdogs-2024-plans
