Consumer Financial Protection Bureau Enforcement Gap May Prompt State Action

Christa L. Bieker of Mayer Brown reports that a slowdown in Consumer Financial Protection Bureau (CFPB) enforcement may lead state regulators to fill the gap, though significant increases in state actions have not yet materialized. Hiring and investigation timelines mean changes will take time, but movement is already underway, with some former CFPB staff joining state agencies and attorneys general offices.

States already enforce their own consumer protection laws, including UDAP/UDAAP provisions, but Section 1042 of the Dodd-Frank Act also grants them authority to enforce certain federal consumer financial laws. This includes Title X provisions, although actions against national banks and federal savings associations are more limited. The scope of state authority over the 18 enumerated federal consumer financial laws, such as the Truth in Lending Act and Fair Credit Reporting Act, remains legally contested.

In 2022, the Consumer Financial Protection Bureau issued an interpretive rule supporting state enforcement of these laws, a position upheld by one federal court. However, in May 2025, the Bureau reversed its stance, asserting that Congress did not intend to grant states such broad federal enforcement powers. Under Section 1042, states must notify the CFPB before initiating Title X actions, giving the Bureau an opportunity to intervene, remove cases to federal court, and participate in litigation.

Some federal laws, including the Fair Credit Reporting Act, independently provide states with explicit enforcement rights. Given the potential for expanded state oversight, Bieker advises regulated entities to maintain strong compliance management systems addressing both state and federal requirements. Doing so will position them to navigate a shifting enforcement landscape.