Just days before the inauguration, the Consumer Financial Protection Bureau (the CFPB) issued guidance to states in a report titled, “Strengthening State-Level Consumer Protections: Promoting Consumer Protection Federalism.”1 In its report, the CFPB urges states to strengthen state-level consumer protection laws. Many people suspect the new administration will roll back federal consumer protections. If states follow the CFPB’s guidance, however, businesses may find themselves operating in a more complex and more restrictive legal environment.
In addition to reminding states they can enforce the federal Consumer Financial Protection Act, the CFPB’s report offers a myriad of suggestions for building up state-level consumer protections.
Incorporate “abusive” into state law. The CFPB recommends that states ban abusive practices, including practices that (1) materially interfere with consumers’ ability to understand a consumer financial product or service, or (2) take unreasonable advantage of consumers’ (a) lack of understanding regarding material risks, costs, or conditions, (b) inability to protect their interests, or (c) reasonable reliance on a business to act in their best interests. According to the CFPB, a ban on abusive practices would provide better protections to consumers in states that currently ban only unfair or deceptive practices because abusive practices encompass a wider array of harmful conduct and do not require a showing of consumer injury to establish liability.
Create stronger remedies and tools for investigation and enforcement. The CFPB recommends that states equip their law enforcers with broad investigatory powers, including market-monitoring authority, pre-lawsuit investigatory powers, and the ability to obtain legal or equitable relief for state residents. Further, the CFPB recommends that states impose personal liability on corporate officers and provide for punitive damages for violations of state consumer protection laws.
Eliminate requirement to prove monetary injuries. The CFPB recommends that states remove any requirements for proof of ascertainable loss, reliance on a misleading or deceptive statement, or monetary harm to establish liability. The CFPB argues that, especially in the digital age, even catastrophic harm can be difficult to trace or quantify.
Ensure consumer protections also protect businesses. The CFPB recommends that states update their definition of “consumer” to include businesses because businesses interact with financial institutions, and many business owners blend their personal and business finances.
Revitalize private enforcement. The CFPB recommends that states permit consumers to bring lawsuits on behalf of the state to enforce consumer protection laws, even if the consumer’s individual claims are subject to an arbitration clause. Because limited government resources are allocated to detecting and prosecuting violations of consumer protection laws, the CFPB explains, private enforcement is critical to deterring violations.
Provide strong and enforceable consumer data and privacy rights. The CFPB recommends that states bolster consumer data and privacy rights through a variety of changes, including giving consumers a legal right to require a company to delete data about themselves and prohibiting the transfer of consumer data to third parties.
Create bright-line prohibitions of junk fees. The CFPB recommends that states require advertised prices to reflect the actual total price. Businesses would be prohibited from advertising a lower “sticker price” only to add on unavoidable “junk fees” or ancillary costs after the consumer takes steps to purchase the product or service.
The CFPB’s report is a reminder of the important role that state legislators and law enforcers play in regulating business. If states heed the CFPB’s advice, businesses may find themselves forced to navigate complex regulatory landscapes that vary from state to state. State consumer protection laws may prove onerous for businesses, even if the federal government walks back federal-level consumer protection laws. Further, state law enforcers may conduct more investigations and bring more enforcement actions under consumer protection laws. Finally, consumers may bring lawsuits, including class-action lawsuits, in greater numbers. For these reasons, businesses should ensure compliance with both federal and state consumer protection requirements now and in the future. As always, Snell & Wilmer’s special litigation and compliance team continues to monitor legal developments related to consumer protections.
Footnotes
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Consumer Financial Protection Bureau, Strengthening State-Level Consumer Protections: Promoting Consumer Protection Federalism (Jan. 14, 2025), https://files.consumerfinance.gov/f/documents/cfpb_strengthening-state-level-consumer-protections_2025-01.pdf.
