If you’re following the news, you may have seen or heard something about the recent Supreme Court ruling in favor of the Consumer Financial Protection Bureau, often referred to as the CFPB, and be wondering what it’s all about. 

We’re here to help break down what the CFPB is, what function it serves, and why this latest ruling is meaningful to you as a consumer. 

What is the CFPB? 

The CFPB is a “21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive,” according to the CFPB website. 

Basically, the CFPB is responsible for protecting consumers like you.  

It does so by: 

• Writing rules, supervising companies, and enforcing the law to stop unfair, deceptive, and abusive practices in the financial marketplace 

• Enforcing anti-discrimination laws in consumer finance 

• Taking consumer complaints 

• Enhancing financial education 

• Researching the consumer experience of using financial products 

• Monitoring financial markets for new risks to consumers 

The CFPB was established in 2011 in response to the Great Recession of 2007-08 to prevent another financial crisis by better regulating mortgages, student loans, and other financial products.  

Since its inception, it has provided over $20.7 billion¹ in consumer relief through monetary compensation, principal reductions, debt cancellations, and more.  

All of us as consumers benefit from the ways the CFPB stops predatory lending. 

What is the Supreme Court ruling about? 

Because the CFPB is considered a “watchdog agency,” it develops and enforces regulations and goes after financial institutions that are taking advantage of consumers. Some banks, credit unions, and payday lenders have argued that the CFPB has too much power and enforces too many unnecessary regulations.  

In reality, most of the regulations the CFPB enforces are in place to stop things like predatory lending, high credit card late fees, and discrimination. Predatory products like payday lending are often marketed to consumers as being “helpful,” but actually charge high interest and fees, putting borrowers into a cycle of debt.  

To fight against these increased regulations, payday lenders tried to find a way to invalidate the existence of the CFPB by arguing that the source of funding for the CFPB was unconstitutional. 

The Supreme Court voted 7-2 to dismiss this challenge and rule the CFPB funding structure as constitutional, which is a big win for us as consumers. Nadine Chabrier, senior policy and litigation counsel at the Center for Responsible Lending (CRL) said, "This ruling enables the immensely popular Consumer Financial Protection Bureau to keep doing its job as a watchdog agency that protects Americans’ wallets from predatory financial firms.”² 

What would have happened if things had gone the other way? 

If the Supreme Court had ruled against the CFPB, it has been projected that there would be far-reaching impacts. 

Here are a few important ongoing CFPB initiatives that would have disappeared: 

• Buy Now, Pay Later regulations: The CFPB has been working to provide consumers who use buy now, pay later financing with the same consumer protections as credit cards, like disputing charges and obtaining refunds. 

• Removing medical bills from credit reports: The CFPB has been working toward the removal of medical bills from credit reports to help families recover financially from medical crises without it negatively affecting their credit scores. 

• Overdraft fee reform: The CFPB has recently proposed a rule to rein in excessive overdraft fees. It would require large financial institutions to provide clear disclosures and limit fees. 

What is Self-Help's role in this? 

Self-Help's nonprofit research and policy affiliate, the Center for Responsible Lending (CRL), has been actively working to defend the CFPB:  

• CRL authored a brief to help argue the case for the CFPB to the Supreme Court that was joined by small financial industry players, including Self-Help Credit Union, expressing serious concern over the consequences of eliminating the CFPB.  

• CRL released polls showing voters’ overwhelming approval of the CFPB to help support CFPB’s public image. 

• Self-Help CEO Martin Eakes, CRL Board Member Wade Henderson, and CRL staff provided various briefings for Senators, House staffers, and Senate staffers to pressure Congress to uphold CFPB funding independence. 

We believe the CFPB is crucial to our communities and that their function aligns with our mission to advocate for economic justice and protect underserved communities. Payday lenders like the ones trying to take down the CFPB often target low-income communities who feel they don’t have other options, which is why we support the development of policy and regulatory infrastructure needed to ensure an equitable lending marketplace for all consumers.   

Find out more about CRL’s response to the Supreme Court ruling and learn more about the issues that we are advocating for at responsiblelending.org. 

If you are concerned that you may be experiencing unfair issues or predatory practices with a financial product or service, you can submit a complaint to the CFPB. They will send it to the company responsible and share it with other agencies to facilitate supervision and enforcement of any financial activities. 

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