The CFPB has begun issuing Consumer Financial Protection Circulars to the government agencies responsible for co-enforcing federal consumer financial law. The Circulars are policy statements that outline how the CFPB intends to enforce the law. According to the CFPB, the goal is to "promote consistency among enforcers and fair competition in the market."
The CFPB issued the first two circulars back to back. On May 16, 2022, it issued Consumer Financial Protection Circular 2022-01, which sets the new policy on the use of such circulars, and the next day it issued Circular 2022-02 on the deceptive use of the name or logo of the Federal Deposit Insurance Corporation (FDIC).
Multiple Federal and State Agencies and Sometimes Individuals Enforce Federal Consumer Financial Law
The CFPB is the principal federal regulator responsible for administering the federal consumer financial laws (12 U.S.C. 5511), including the Consumer Financial Protection Act's (CFPA) prohibition against unfair, deceptive, and abusive acts or practices, and 18 other "enumerated" consumer laws (12 U.S.C. 5481(12)). In addition, enforcement responsibility for these laws is spread among:
- state attorneys general and state regulators;
- prudential regulators, such as the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the National Credit Union Administration;
- the Department of Justice, the Federal Trade Commission, the Farm Credit Administration, the Department of Transportation, and the Department of Agriculture also have joint authority to enforce specific statutes; and
- private enforcement by consumers, where the federal consumer law provides a private right of action, such as the Fair Credit Reporting Act.
Scope of Consumer Financial Protection Circulars
According to Circular 2022-01, "Consumer Financial Protection Circulars will provide background information about applicable law, articulate considerations relevant to the CFPB's exercise of its authorities, and advise other parties with authority to enforce federal consumer financial law."
The CFPB has categorized these agency actions as general policy statements under the Administrative Procedure Act, 5 U.S.C. 553(b). As a result, the CFPB will bypass APA notice-and-comment rulemaking, and the CFPA's specific requirements regarding factors that it must consider when engaging in rulemaking, including consideration of costs and benefits. Furthermore, because the Circulars are cast as policy statements, they may be less readily subjected to judicial review. Yet, if the CFPB were to be challenged, and a court determined that a policy statement is reviewable, then a party may seek to invalidate a policy statement on the grounds that the agency action was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. 706(2)(A).
But, realistically, even if Circulars are nonbinding, the number of potential enforcers and tools available to them, including supervision and examination, and enforcement actions for noncompliance, may make it uncomfortable or impractical for individual consumer financial service providers and their service providers to disagree with Circulars.
Circulars Will Be Made Public
The director of the CFPB will authorize issuance of each Circular, and the CFPB will publish them on its website and in the Federal Register.
Consumer Financial Protection Circular 2022-01: System of Consumer Financial Protection Circulars to agencies enforcing federal consumer financial law
Consumer Financial Protection Circular 2022-02: Deceptive representations involving the FDIC's name or logo or deposit insurance
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