The CFPB’s Enforcement Agenda Will Roll Along into 2025

November 14, 2024

It may be easy to think that the Consumer Financial Protection Bureau will halt its agenda following the re-election of President Donald J. Trump. But we don’t believe that it will.

This year, the CFPB has aggressively adopted new regulations in its broad consumer financial protection mandate. These include regulations on personal financial data rights (nicknamed the “open banking” rule) that allows consumers to tell their banks to share account data with other providers, a limit on overdraft fees, and registration by non-banks (including pawnbrokers) of final orders issued against these providers by local, state, and federal governments (including orders by the CFPB itself) since 2017. (For more information on the regulation requiring reporting of orders issued by local, state, and federal governments, see our GRC Update at https://www.nationalpawnbrokers.org/2024/09/05/new-rule-about-nonbank-registration-of-court-orders.

Its most recent “regulatory agenda” list is long and covers many aspects of consumer financial transactions. You can read more about the agenda at https://www.consumerfinancialserviceslawmonitor.com/2024/07/highlights-from-the-cfpbs-spring-2024-semi-annual-regulatory-agenda/, a report prepared by a major law firm that is easy to digest. None of the new proposed rulemaking proceedings cover pawn transactions.

What ongoing CFPB actions will affect pawn businesses most? The Bureau has been pursuing an aggressive agenda of enforcement actions. Some of these pending or recently completed focus on violations of the MLA or the Servicemembers Civil Relief Act by non-bank providers, including companies that offer pawn or “title loans”. In July 2022, the CFPB announced its plans to prioritize aggressive enforcement of the MLA.

Top of this list is the enforcement action filed against FirstCash, Inc. for violations of the Military Lending Act (“MLA”) in November 2021. The action alleges that FirstCash subsidiary, CashAmerica West, made more than 3,600 pawn transactions with more than 1,000 consumers in four Western states who were active-duty servicemembers or dependents (“covered borrowers” under the MLA) in which the Annual Percentage Rate exceeded the MLA’s maximum 36 %. The CFPB maintains that violations occurred between June 2017 and May 2021.

On November 8th, the federal district court judge assigned to the case rejected one of FirstCash’s defenses to liability for violations alleged. The judge denied FirstCash’s motion for partial summary judgment on three of the CFPB’s claims against FirstCash. This ruling opens the path to a full trial sometime in the future.

The CFPB had sued CashAmerica’s former subsidiary Enova, Inc. in late 2013 for MLA violations in connection with payday loans. We believe, this encouraged the Department of Defense to extend the MLA regulations to pawn transactions in 2016.

The CFPB also sued TitleMax title lenders for violations of the MLA in 2023. You can read about the action against TitleMax here: https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-titlemax-to-pay-a-10-million-penalty-for-unlawful-title-loans-and-overcharging-military-families/.

The CFPB’s pending enforcement actions will continue into 2025 and new investigations or enforcement actions are likely to be commenced. Your businesses need to ensure that compliance with federal consumer financial protection laws is a top priority in 2025.

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