The Consumer Financial Protection Bureau (CFPB) has been a focal point for both regulatory oversight and political debate arguably since its inception. Created in 2010 as a response to the financial crisis, the CFPB is still a young agency, which in the past fifteen years has come under judicial scrutiny and certainly earned its reputation to be in the limelight. Recent changes –Donald Trump’s removal of CFPB former Director Rohit Chopra, the resignation of CFPB General Counsel Seth Fortman, and the appointment of Russel Vought as the CFPB Acting Director, just to name a few in the past 10 days – have put the agency’s future at the center of a whirlwind of speculation. Over the weekend, Vought also instructed CFPB staffers to work remotely this week, and ordered a suspension of certain agency activities, compounding the speculation.
What is clear, however, is that even as uncertainty clouds the future of the CFPB, consumer protection will not simply fade away. Whether through state-level enforcement, intervention by the Federal Trade Commission (FTC), or a combination of both, consumer protection laws will continue to be enforced on the federal and state level with or without the CFPB. The proper regulatory framework is in place.
The Speed of Change and the Pitfalls of Speculation
With political changes ensuing, stakeholders and experts alike across the financial sector seem to be scrambling to anticipate what comes next regarding the CFPB. Unfortunately, in this rush for clarity, many are making sweeping predictions sometimes based on incomplete information. Speculation about the CFPB’s ability to function, its enforcement priorities, or even its very existence has created more confusion than clarity. While it is natural for businesses, consumers, and policymakers to seek definitive answers, the reality is that we are in a period of flux, and patience will be required to see how these changes truly unfold.
Who Will Fill the Void? The Role of States and the FTC
Despite the current uncertainty about the CFPB’s future, consumer protection will remain a top priority for both federal and state governments alike. If the CFPB’s existence and oversight diminishes, state regulators and attorneys general will need to step in to increase their existing efforts to enforce federal consumer protection laws within their jurisdictions. Many states have already demonstrated a willingness to take aggressive action against predatory financial practices to enforce federal consumer protection laws, and this trend will continue to increase over time.
California, for example, has taken significant steps to bolster its consumer protection efforts through the Department of Financial Protection and Innovation (DFPI), often referred to as a "mini CFPB." The DFPI generally has broad authority to regulate financial services and has demonstrated a commitment to enforcing consumer protection laws at the state level. Its growing influence suggests that even if federal oversight wanes, some states are well-prepared to fill the gap. Not long after the DFPI’s restructuring and expanded oversight in 2020, it issued its first enforcement action against a debt collector for alleged illegal and deceptive debt collection practices that targeted vulnerable consumers. This type of proactive state-level enforcement underscores the ability of agencies like the DFPI to step in where federal oversight may recede.
However, for state agencies and attorneys general to effectively assume a greater enforcement role, salaries for enforcement personnel will likely need to increase to attract and retain top talent. Any shift in consumer protection efforts from the federal level to state-side will not be overnight: in addition to hiring additional enforcement attorneys and staff, states will need budget increases, approvals, and sufficient training resources, all of which will take time to effectuate. Additionally, systematic efforts to strengthen local investigative units will be necessary to ensure robust enforcement capacity. These efforts, which have been evolving since the first Trump administration, may now receive additional momentum as states recognize the growing need for consumer protection at the local level.
At the same time, the FTC (created in 1914) – whose mission is similar to the CFPB’s (i.e., “protecting the public from deceptive or unfair business practices and from unfair methods of competition through law enforcement, advocacy, research, and education”) – may take a more prominent role in consumer protection at the federal level. Historically, the FTC has been seemingly steadfast in regulating unfair and deceptive practices, and it is possible it may expand its efforts should the CFPB’s regulatory reach contract.
Taking a Cautious Approach Amid Uncertainty
Businesses and consumers alike should take a measured approach to the CFPB’s evolving role. Regulatory frameworks do not change overnight, and while uncertainty remains, reactionary decision-making based on speculation can lead to unnecessary risk. Instead, keeping an eye on state actions, expanded recruitment efforts, and potential FTC involvement will provide a more grounded sense of where consumer protection is heading.
This uncertainty is unfolding at an extraordinary pace, making it difficult to predict the final outcome. What we do know is that some federal enforcement efforts will shift to state regulators, while others may be assumed by the FTC—both of which have historically played significant roles in consumer protection. However, the exact shape of this new regulatory landscape, the timeframe for these changes, and the ultimate fate of the CFPB itself remain open questions. One certainty is that ongoing developments will be an incremental process as the regulatory oversight shifts from the CFPB back to the states.
