Chopra Invites State AGs to Team Up
At a recent meeting of the National Association of Attorneys General, CFPB Director Rohit Chopra urged state Attorneys General (AGs) to collaborate with the CFPB on enforcement actions or to bring their own under federal law.
“State AGs have been a valued, critical Bureau partner—collaborating on enforcement actions, consumer outreach, and on regulatory improvements,” Chopra said according to his prepared remarks. “State AGs often lead the charge on their own, as the laboratories of innovation of new, creative ideas and claims. At other times, we have seen you lead as the last, if not only, line of defense in consumer protection.”
“We encourage you to bring actions under the Consumer Financial Protection Act, particularly when federal protections are stronger than state statutes,” he continued. “One way we hope to further enhance your enforcement tools is by clarifying the wide variety of claims that states can bring under the CFPB’s statute. We want to make clear that state AGs and regulators can enforce a range of federal prohibitions and allow you to join forces.”
Chopra also said that he is considering changes that would allow states to access the multimillion-dollar Civil Penalty Fund, which would direct more relief to consumers in state actions. Currently, the Consumer Financial Protection Act (CFPA) limits civil monetary penalties to instances with CFPB notice or a court-ordered assessment.
“Currently, victim redress from the fund is only available in matters where the CFPB takes part in an enforcement action,” he said. “Our goal is to quickly and efficiently distribute funds to harmed consumers and we hope to bolster your ability to get relief for your state’s consumers. To provide that expanded access, I’m considering changes to our rules so states do not need the CFPB to join their suits in order for victims to access victim relief funds. In the interim, we are committed to reviewing expeditiously notifications from states, so we can join actions, where appropriate. This will allow states to access the funds on behalf of violated consumers.”
When filing enforcement actions against bad actors, Chopra said attorneys general should use the federal prohibition on “unfair, deceptive, or abusive acts or practices” (UDAAP), especially when federal protections are stronger than state statutes. Rather than preempting state enforcement, the CFPB will be promoting enforcement of federal consumer protection by attorneys general.
Chopra also noted that the CFPB wants to rein in repeat offenders that violate court orders at both the state and federal level. The Bureau is examining remedies to address the issues that drive repeat offenders, like those directed at senior management and executive levels, as well as structural reforms to change incentives and behavior.
“Recidivism not only deprives consumers of protections in the marketplace, but it also saddles them with the direct and downstream costs of non-compliance,” Chopra said. “In other words, consumers end up subsidizing corporate malfeasance.”