CFPB Launches New System to Promote Consistency Among Enforcers

On May 16, the Consumer Financial Protection Bureau (CFPB or Bureau) announced that it will launch a new initiative to provide guidance to other agencies with consumer financial protection responsibilities on how the CFPB intends to enforce “Federal consumer financial law.” 12 U.S.C § 5481(14).

The CFPB will use Consumer Financial Protection Circulars, described as “general statements of policy,” under the Administrative Procedure Act. These circulars will provide background information about applicable law; articulate considerations relevant to the CFPB’s exercise of its authorities; and, in the interest of maintaining consistency, advise other parties with authority to enforce “Federal consumer financial law.” Circulars will be released publicly.

The CFPB’s first-issued circular, “Deceptive representations involving the FDIC’s name or logo or deposit insurance,” appears in the form of a Q&A. The question: When do representations involving the name or logo of the Federal Deposit Insurance Corporation (FDIC) or about deposit insurance constitute a deceptive act or practice in violation of the Consumer Financial Protection Act (CFPA)? The CFPB then follows with its answer: “Covered persons or service providers,” the Bureau writes, “likely violate the CFPA’s prohibition on deception” by misusing the name or logo of the FDIC by engaging in false advertising or making misrepresentations to consumers about deposit insurance, regardless of whether such conduct (including the misrepresentation of insured status) is engaged in knowingly. In addition to its answer, the CFPB also provides a section on analysis with footnotes.

Whether this Q&A format will continue for all future circulars is yet to be seen.

The federal banking regulators often issue joint statements and guidance (e.g., November 10, 2021 “Joint Statement on Supervisory and Enforcement Practices Regarding the Mortgage Servicing Rules in Response to the Continuing COVID-19 Pandemic and CARES Act”). The CFPB initiative and its first circular, however, indicate the CFPB is willing to act on its own by sharing its views with its sister agencies without coordinating with them beforehand.