Court Orders CFPB Leaders to Keep the Watchdog Agency Alive
The Consumer Financial Protection Bureau, created in the wake of the 2008 banking crisis, has been targeted for possible elimination.
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Updated on March 28.
A federal judge issued a court order Friday that aims to block efforts by the Trump administration to dismantle the Consumer Financial Protection Bureau. U.S. District Judge Amy Berman Jackson granted a preliminary injunction that will stay in place while a lawsuit filed by the union representing CFPB workers proceeds through the court.
“If the defendants are not enjoined, they will eliminate the agency before the Court has the opportunity to decide whether the law permits them to do it, and as the defendants’ own witness warned, the harm will be irreparable,” Berman Jackson said in her order, according to the Associated Press.
The order prevents new leaders from eliminating data or records, terminating staff, and enforcing a stop-work order issued in February. It also requires the CFPB to reinstate all staff who were fired after Feb. 10, as well as give them access to do their jobs either at an office or at home. It also directs the agency to ensure its consumer complaint operations are functioning and to unwind its work to cancel other contracts.
The bureau’s work had largely halted after a Feb. 10 email from acting director Russell Vought directed CFPB staff to “not perform any work tasks.” But as Berman Jackson considered whether to grant the injunction, the CFPB had resumed some activities mandated by Congress, such as its consumer complaint program, according to testimony. The New York Times reported March 15 that the bureau’s consumer response team was working through a pile of 16,000 complaints.
Under new leadership, the Consumer Financial Protection Bureau continues to walk back the work it did under the Biden administration. Most recently:
The CFPB is trying to return a $105,000 fine to Townstone Financial, which the mortgage lender paid in November 2024 to settle a lawsuit over alleged discriminatory practices. In a court document filed with Townstone on March 26, the CFPB says the original investigation was unmerited and the lawsuit violated the lender’s First Amendment rights and asks the court to vacate the final judgment and order.
The bureau asked for — and a judge granted — 30 days to settle a lawsuit over a rule that would have substantially reduced credit card late fees. The lawsuit has prevented the rule from taking effect.
In a third case, the agency says it plans to revoke an interpretive rule that introduced new protections for users of buy now, pay later loan products, according to a March 26 court filing. The rule, which was made in May 2024, would have treated BNPL providers the same as credit card companies under lending laws. The Financial Technology Association filed a lawsuit challenging the rule in October.
What is the CFPB?
The Consumer Financial Protection Bureau, or CFPB, is a government agency created to oversee the consumer finance industry, including banks, lenders and other financial institutions. As its name suggests, it’s a consumer-focused agency whose goal is to ensure people can access fair, transparent and competitive markets for financial products. It also provides consumer financial education.
What does the CFPB do?
The CFPB was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. It was seen as a chance to bring better enforcement and accountability to the consumer finance industry after the financial crisis exposed borrowers’ vulnerability in a complicated marketplace that wasn’t being held accountable for unfair, deceptive and abusive lending practices.
By creating a consumer protection agency, the federal government initiated supervision of financial product and service providers that had largely flown under the radar. It also took over responsibilities that had been divided among several government offices.
In practice, the CFPB makes rules that improve transparency, supervises financial services companies, enforces consumer laws and acts on consumer complaints. However, under the current administration, those activities have largely halted.
The agency is led by acting director Russell Vought, who also serves as director of the Office of Budget and Management. President Donald Trump nominated Jonathan McKernan on Feb. 11 to become the permanent director of the CFPB. McKernan previously served as a board member of the Federal Deposit Insurance Corporation. He’ll have to be confirmed by the Senate.
What’s happening at the CFPB?
Under the new Trump administration, some recent work by the CFPB has been undone.
CFPB drops pending lawsuits
The CFPB has dropped at least nine lawsuits against financial services companies. Those cases were dismissed “with prejudice,” which means the CFPB forfeited the right to sue over the same claims again in the future. A few notable examples of dropped suits include:
Allegations that the operator of Zelle and three of its owners — Bank of America, JPMorgan Chase and Wells Fargo — failed to safeguard users against fraud, leading to $870 million in losses for customers.
Claims that Capital One cheated millions of consumers out of $2 billion in interest by hiding an opportunity for customers who had an existing 360 Savings account to open a new, similarly named savings account that offered a higher interest rate.
Claims that student loan servicer Pennsylvania Higher Education Assistance Agency illegally collected on student debt that was discharged in bankruptcy and sent false information about borrowers to credit reporting agencies.
Allegations that Rocket Homes gave kickbacks to mortgage brokers and agents who steered homebuyers to Rocket Mortgage.
Allegations that Vanderbilt Mortgage & Finance failed to properly consider manufactured home buyers’ ability to repay loans.
Claims that TransUnion — one of the three largest credit reporting agencies — and its former executive John Danaher violated a 2017 law enforcement action by continuing to use digital “dark patterns” that cause consumers to inadvertently sign up for subscriptions or buy products.
It’s not yet clear what will happen to other pending legal actions. There are several examples of attorneys for the CFPB asking the courts to pause proceedings while cases are reviewed by the agency’s new leadership. In court filings, a CFPB staff member provided written testimony saying they were ordered to terminate nearly all the bureau’s contracts, including those with experts working on pending litigation. Some contracts were later reinstated, but it’s not yet clear which.
Uncertain future for pending rules
A number of CFPB rules also face uncertain futures. With the change in administration, leaders stalled any new rules that were finalized under the previous administration but hadn’t yet taken effect. Some specific rules also face challenges in courts, Congress or both. For example:
Credit card late fee restrictions: The rule would cut the typical credit card late fee from $32 to $8. At the time, the agency estimated it could help roughly 45 million consumers who are charged late fees achieve more than $10 billion in annual savings. It’s one of several rules designed to eliminate junk fees that consumers are forced to pay across a variety of services.
The rule was blocked from taking effect by a lawsuit filed by the U.S. Chamber of Commerce. The case is still ongoing, but could soon be settled. The judge overseeing the case has granted the bureau 30 days to try to settle the matter, according to a March 24 update posted to the Ballard Spahr consumer finance blog. The post cites court documents in which the CFPB said it was optimistic it could reach an agreement.
Bank overdraft fee reductions: The CFPB finalized a rule in December that would have cut overdraft fees charged by large banks and credit unions, including those with more than $10 billion in assets. Major banks typically charge about $35 for each overdraft transaction. Under the rule, banks would have to drastically cut their fees or treat overdraft services like any other lending program by disclosing the terms. The rule was slated to take effect Oct. 1.
Industry groups filed a lawsuit in December to block the rule. Recently, the judge in that case allowed two nonprofit organizations to intervene and defend the rule based on his belief that the new administration won’t do it. Meanwhile, on March 27, the Senate approved a resolution that would nullify the rule altogether. A similar resolution is working its way through the House.
Medical debt removal: Another new rule, which was set to take effect March 17, would have removed an estimated $49 billion in unpaid medical debt from consumers’ credit reports and prevented medical bills from appearing on credit reports going forward. It also prohibited lenders from considering medical debt when evaluating a borrower’s ability to repay a loan.
This rule faces multiple lawsuits that claim the CFPB overstepped its authority. It also could be nullified by resolutions introduced in the House and Senate.
Digital payment apps oversight: With a rule that took effect Jan. 9, the CFPB started to supervise companies providing digital wallets like Apple Pay and peer-to-peer digital payments apps like Venmo or Zelle (or the kind Elon Musk hopes to integrate with X). When it was finalized in November, the bureau said the rule would “help the CFPB to ensure that these companies — specifically those handling more than 50 million transactions per year — follow federal law just like large banks, credit unions, and other financial institutions already supervised by the CFPB.”
But a resolution passed by the Senate on March 5 would overturn that rule. It still needs to pass the House.
Previous work by the CFPB
Before the CFPB was largely dismantled, its enforcement and supervisory work netted consumers $21 billion in refunds, principal reductions, canceled debts and other consumer relief. Since its inception, it has also imposed more than $5 billion in civil penalties on companies and individuals who broke consumer protection laws.
Previous examples of the bureau’s work include:
Penalizing banks for creating fake accounts.
Rooting out harmful private student loan lenders and federal servicers.
Investigating discriminatory lending practices.
Stopping wrongful auto repossessions.
Ordering refunds for defrauded customers.
Supporting Department of Education efforts to cancel student debt.
Regulating new financial products and technology.
What the CFPB can do for you
Here are some direct links to the CFPB’s services for consumers:
Submit a complaint: The agency takes consumer complaints about financial products and services, including credit cards, mortgages and other consumer loans, credit reporting and debt collection. Not only will the CFPB work to get you a response from the company, it also uses consumer complaints to prioritize its initiatives.
The bureau also maintains a public complaint database, which helps consumers get information about institutions or products and makes it clear which tend to cause the most trouble.
Blow the whistle: Anyone currently or previously working in the financial industry who wants to report misconduct can do so using dedicated communication channels.
» Have you submitted a complaint to the CFPB? NerdWallet reporter Taryn Phaneuf is covering ongoing changes at the agency under the new administration. Get in touch via email: [email protected].
How to reach the CFPB
The best way to make specific complaints, comments or reports is through the links above. Here are a few more ways to find out information from the CFPB or contact the agency.
CFPB website: consumerfinance.gov. Its Ask CFPB library can answer additional questions.
CFPB phone number: 855-411-2372
Mailing address for complaints:
Consumer Financial Protection Bureau
PO Box 27170
Washington, DC 20038
Mail address for all other mail:
Consumer Financial Protection Bureau
1700 G St. NW
Washington, DC 20552
