A relatively new government beast, the Consumer Financial Protection Bureau (or CFPB, for short) was created in response to the 2008 financial shakedown of American consumers. It’s basically the arm of government meant to give some teeth to the federal consumer laws, like the Fair Credit Reporting Act and the Fair Debt Collection Practices Act.
If you look around its website, you’ll quickly see that it considers its powers to be threefold:
“Empower” and “Educate” kind of seem like the same thing to me – aren’t you empowered when you are educated? Or something like that? I guess as an attorney I should be able to appreciate the subtle nuanced differences they make between “empower” (create tools, answer questions, provide tips) and “educate” (encourage financial education, publish research, educate financial companies on their responsibilities), but it really all seems like it could belong in one big group.
So if you have questions about getting a mortgage, or are wondering what your rights are as a consumer under federal law, the CFPB website is the place to be.
The “enforcement” wing of CFPB’s powers is more exciting – the CFPB can bring actions against financial companies for violations against consumers. In briefly looking over the cases the CFPB lists on its website, the cases seem like class action cases. Where there are enough consumers harmed, there is enough initiative to yank the leash and harness the wrongdoing financial company. For instance, one class of victims was entitled to compensation out of a $14M pool of money from Amerisave Mortgage Corporation and Novo Appraisal Management Corp.
The weird part is that there’s only 17 cases listed for “payments to harmed consumers.” The CFPB touts that it was won back billions of dollars for consumers who have been mistreated in some way by financial companies, and it makes sense if they’re getting millions of dollars in one settlement. But how do they find their class of victims, and do the funds get appropriately distributed? How much of the CFPB’s budget is dedicated to enforcement, and how much is applied towards empowering/educating consumers?
Providing consumers the opportunity to file a complaint against a financial institution seems to be the main focus of CFPB for now. They have a huge 2015 report of all the complaints they’ve received, even breaking them down by type of complaint, such as mortgage complaints and credit card complaints.
So if you have questions about your mortgage, your credit card, student loans, payday loans, prepaid cards, financial services, money transfers, consumer loans, bank account and service, credit reporting, or debt collection, the CFPB should be one of the first places you look to see what your rights are. It is pretty exciting that there’s actually a government agency that handles consumer law from every angle instead of a piecemeal approach from several different agencies.
Now the question is: do consumers know about the CFPB, and is the CFPB, in its own words “Helping you live a smarter, healthier financial life”?