Prior to the establishment of the CFPB, seven different agencies were responsible for protecting consumers “at some level,” but it wasn’t the main focus of any of them, said Eleanor Blume, an attorney at the CFPB. There was no one place whose sole mission was consumer protection within the various financial markets.
At a recent American Bar Association panel, “CFPB and State Attorneys General: A New Age for Consumer Financial Protection,” public and private attorneys discussed the coordinated effort between the federal agency and state AGs to help put an end to harmful financial practices.
The CFPB and many state attorneys general now work together by sharing resources and information. For Michael Troncoso, senior counsel for California Attorney General Kamala D. Harris, there are four areas in which it is crucial that AGs partner with the CFPB:
- Evaluating markets that don’t have meaningful consumer choice (loan servicing, debt collection, credit reports).
- Finding vulnerable populations that may not know where or how to raise their concerns.
- Elevating an issue that previously didn’t receive the federal attention it deserved.
- Sharing data, particularly of consumer complaints.
Blume agreed with Troncoso’s priority list for collaboration but stressed the importance of the CFPB receiving tips not only from attorney general offices but from other entities and individual consumers as well. She mentioned that the Utah Department of Commerce brought a mortgage company to the bureau’s attention and that the CFPB has filed a civil action against that business. “By partnering and sharing these types of concerns and acting in meaningful concert, we can address those market problems more effectively,” Blume said.
Data sharing is critical not just to state and federal entities but to the companies and industries being regulated as well. “Companies are better served when all of the regulators talk,” said Ashley L. Taylor Jr., a partner at Troutman Sanders LLP and a former Virginia deputy attorney general. “The more the regulators have an understanding of an industry and the better data they have, the better it will serve all of our interests in the long term.”
For lawyers who represent companies or industries, the overlapping jurisdiction and varying degrees of regulation can give them a litigious headache. “Companies are concerned about this because they can’t measure return on investment, how much to invest in regulatory work,” Taylor said.
He said that in a recent survey of 1,000 general counsels, 53 percent put regulatory compliance as the No. 1 threat to their business. “That was a bigger threat than litigation, fraud and corruption,” Taylor said. “They view the regulatory threat as larger than competition or sales.” Companies are watching the CFPB and state attorneys general very closely to see whether these partnerships result in stricter regulations with multiple enforcers, he added.
Jermaine Brown, assistant attorney general for the state of Oregon, said he doesn't see these partnerships as a threat for industries. “Oregon industries always say they don’t have a problem with the AG’s office when the AG’s office moves forward with consumer protection issues,” Brown said. “I think we have a good reputation of being reasonable. That’s the reputation AG offices have generally across the country.”
Communicating with consumers is just as critical to CFPB efforts as partnering with the state AGs. The “AskCFPB” tool is an interactive database of thousands of answers to questions from consumers about consumer finance issues. “Where a consumer can protect him or herself, we want to ensure that they have all the tools to do that,” Blume said.
Troncoso also said the role of AGs and the CFPB should also be to empower and educate the consumer to prevent them from becoming a victim of fraud or deceptive practice. “Most important areas for consumer outreach are access to institutions and access to information,” he said. “You have to use the same data that companies use to reach these consumers.”