Top 10 Actions by the Consumer Financial Protection Bureau (CFPB) to Safeguard U.S. Consumers in 2023

In celebration of the 12th anniversary of the Consumer Financial Protection Bureau (CFPB), PIRG - Public Information Research Group, is highlighting the top 10 crucial actions undertaken by this federal agency throughout 2023 to safeguard the interests of US consumers.

What is the CFPB?

The CFPB, founded in 2011 under the Dodd-Frank Wall Street Reform and Consumer Protection Act, has been at the forefront of protecting consumers from the unscrupulous practices of the financial industry, particularly in the aftermath of the 2008 economic crash.

With an unwavering commitment to its mission, the CFPB has recouped substantial amounts for consumers, enforced consumer protection laws through numerous actions, and addressed millions of consumer complaints against financial companies.

This article delves into the ten remarkable actions that the CFPB has taken this year to ensure financial fairness and consumer protection.

1. Holding Bank of America Accountable

The CFPB demonstrated its dedication to protecting consumers by ordering Bank of America to redress multiple grievances in July. The financial giant was directed to refund over $100 million to customers who faced illegal "insufficient funds fees" for the same transactions, suffered credit card rewards point withholdings, and had fake credit card accounts opened without their consent.

Furthermore, Bank of America was required to pay $90 million in penalties to the CFPB and $60 million to the Office of the Comptroller of the Currency (OCC). This strong stance by the CFPB sends a clear message that unethical practices will not be tolerated, and financial institutions will be held accountable for their actions.

2. Tackling the Harms of Medical Credit Cards

In a noteworthy move to protect vulnerable consumers, the CFPB conducted a hearing in July on the rise of "medical credit cards" and their impact on families' medical debt.

Together with the Departments of Treasury and Health & Human Services, the CFPB sought feedback on the proliferation of these cards and their connection to mounting medical debt.

A study conducted by OSPIRG in Oregon revealed that health-care-specific credit cards were the most frequently listed creditor in bankruptcies. The CFPB's engagement with this issue and advocacy from consumer groups like U.S. PIRG emphasize the need for rules that curb the promotion of medical credit cards and eliminate the inclusion of medical debt on credit reports.

Addressing Medical Billing and Collection Practices

In February, the CFPB released a report showing a significant 33% reduction in medical debt reporting from 2018 to 2022. This trend was attributed to some debt collectors shifting away from reporting medical collections information to credit reporting companies due to concerns about data integrity and compliance with the Fair Credit Reporting Act.

The CFPB's ongoing efforts to monitor medical debt's impact on consumers led to major credit bureaus removing paid medical debt from credit reports for amounts less than $500. However, consumer advocates argue for more extensive reforms, advocating that medically necessary debt should not be reported or considered at all.

Safeguarding Servicemembers from Digital Payment App Risks

In June, the CFPB's annual report identified a growing concern for servicemembers, veterans, and military families regarding the risks associated with digital payment apps. These risks include fraud and inadequate responsiveness to fraud by app providers.

To protect servicemembers' financial well-being, the CFPB recommended that digital payment app providers enhance network security, coordinate closely with financial institutions to address issues swiftly, and tailor refund policies to accommodate the unique experiences of military families. This proactive approach reinforces the CFPB's commitment to supporting those who serve our nation.

Advising Consumers on Federal Deposit Insurance for Payment Apps

In a timely advisory, the CFPB cautioned consumers to transfer funds from payment apps to their bank or credit union accounts. The advisory was accompanied by a CFPB analysis indicating that payment app accounts may lack federal deposit insurance, leaving consumers vulnerable if the app company experiences financial distress.

Until payment apps automatically transfer balances to insured accounts, consumers are encouraged to take proactive steps to secure their funds. This guidance demonstrates the CFPB's commitment to empowering consumers to make informed financial decisions.

Defining Abusive Conduct in Financial Markets

To enforce its mission under the Dodd-Frank Act, the CFPB released a comprehensive policy statement in April, providing guidance on identifying abusive conduct in financial markets.

Companies are prohibited from obscuring essential product or service features, exploiting consumers' lack of understanding, unequal bargaining power, or reliance on them.

The statement also targeted abusive practices such as dark patterns, set-up-to-fail business models, profiteering off captive customers, kickbacks, and self-dealing. By clarifying these standards, the CFPB aims to foster fair and transparent practices within the financial industry.

7. Investigating Business Practices of Data Brokers

The CFPB launched an inquiry into the practices of data brokers, companies that collect vast amounts of data on Americans without robust regulations.

In March, the CFPB issued a Request for Information to understand how data brokers' business models affect consumers' financial well-being. Consumer advocates, including U.S. PIRG, expressed concerns about the lack of transparency and accessibility when dealing with data brokers.

Advocacy groups urge the CFPB to establish rules that hold companies accountable for collecting, sharing, and selling consumer data used in financial services.

8. Combating Illegal Junk Fees on Financial Products

In March, the CFPB released a special report that focused on illegal junk fees imposed by financial companies. These fees included surprise overdraft fees, excessive payment processing fees for auto loans, and mortgage servicing fees for property inspections at incorrect addresses.

In response to the CFPB's findings, many companies discontinued illegal practices and provided refunds to affected consumers. To further address junk fees, the CFPB launched an initiative in January to protect consumers from unexpected, unclear, or exorbitant fees associated with financial products.

9. Enhancing Credit Card Market Monitoring

Per its statutory duty, the CFPB reviewed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act to assess credit card companies' fair practices.

As part of this review, the CFPB sought input from the public on their experiences with credit cards through a Request for Information. Additionally, the CFPB improved its survey methodology to facilitate consumers' ability to compare interest rates and credit products.

Furthermore, the CFPB proposed a rule to reduce standard credit card late fees to maintain consistency with the CARD Act's guidelines.

10. Curbing Deceptive Subscription Services

The CFPB and the FTC joined forces to combat "negative option marketing" and the use of "dark patterns" that trap consumers in unwanted subscriptions or charge them for optional add-ons without proper disclosure or consent.

In January, the CFPB issued guidance affirming that subscription services may violate consumer protection laws if they fail to provide adequate disclosure, obtain informed consent, or create barriers to canceling services.

This enforcement initiative protects consumers from deceptive practices and fosters transparency in the subscription service industry.

Through enforcement, investigations, guidance, and advocacy, the CFPB has taken substantial steps to safeguard consumers' financial well-being and foster fair practices in the financial industry.

These initiatives underscore the agency's dedication to ensuring that consumers can confidently navigate the financial landscape while being shielded from exploitative tactics.