On February 28, 2025, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) filed a letter with the U.S. District Court for the Western District of New York in a case brought by the CFPB and seven state attorneys general, including New York Attorney General (“NYAG”) Letitia James, against a debt relief company alleging a variety of consumer protection violations. The case’s alleged violations related to the company’s debt settlement services and included tricking consumers into paying high up-front fees for these services, collecting over $100 million in illegal fees.
Since the inauguration of President Donald Trump, the CFPB has undergone significant changes impacting its ability to proceed with its enforcement cases. In the letter, the CFPB acknowledged that due to several transitions of leadership that have taken place and varying directives from the Bureau's acting directors to drop cases or stop appearing in them, the CFPB did not timely file a post-hearing briefing in the current action or respond to the defendants' cross-motions. However, the CFPB also stated that it agrees with and adopts the current position of its co-plaintiffs, which include the NYAG, and the attorneys general (AGs) of Colorado, Delaware, Illinois, Minnesota, North Carolina and Wisconsin, and will sign onto the papers the AGs filed if the court allows it to.
This letter marks a shift from the recent voluntary dismissals of enforcement actions we have seen from the CFPB in the last few weeks and shows that cases filed by the CFPB in conjunction with state AGs will not be going anywhere. Through its letter, the CFPB seems to be “passing the baton” to these state AGs to take the lead in consumer protection enforcement as the Bureau goes through this transitionary period. Following the filing of the letter, entities related to the case filed an opposition, stating that the District Court should not allow the CFPB to sign on to the other plaintiffs' papers, as the CFPB inherently “abandoned its motion for a preliminary injunction” by failing to timely file, any reasons for which are “immaterial.”
While many in the current administration have been cheering for the dismantling of the CFPB, having the Bureau take a step back now arguably empowers the fifty state AGs across the country to take the lead in enforcement, meaning companies will now need to deal directly with state AGs when it comes to alleged consumer protection violations. This comes on the heels of state AGs’ recent celebration of Consumer Protection Week 2025, highlighting the importance of consumer protection, the monitoring of consumer complaints, and state AGs’ commitment to enforcement.
