In the wake of the Financial Crisis, the federal government has invigorated its civil fraud enforcement. The U.S. Department of Justice has dominated the headlines in this area with a series of significant lawsuits and resolutions involving mortgage lenders. Yet, behind the headlines, a curious, new category of enforcers is emerging to target violations of federal civil consumer financial protection laws: state agencies and attorneys general. Passed in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act quietly deputized state actors to pursue violations of federal consumer financial protection laws, including a broad prohibition against unfair, deceptive or abusive practices. Dodd-Frank empowers state enforcers—both attorneys general and state agencies and regulators—to investigate and enforce its provisions through civil lawsuits alleging, among other things, unfair practices and violations of federal consumer finance regulations issued by the Consumer Financial Protection Bureau (CFPB).

Not surprisingly, state enforcers have begun using that new power. Last year, New Mexico became the first state to enforce a federal CFPB regulation. This year already has seen no less than four state enforcement actions utilizing Dodd-Frank brought in New York, Illinois and Mississippi. Significantly, these suits have been filed by regulators, such as New York’s Department of Financial Services (NYDFS), that otherwise have limited or no power under state law to sue for such deceptive, unfair or abusive practices. These actions represent a new paradigm for the civil enforcement of federal consumer financial protection laws.

Originally published in the New York Law Journal on September 19, 2014.