Attorney General James Leads Multistate Coalition to Urge U.S. Supreme Court to Preserve Consumer Protection Watchdog

NEW YORK – New York Attorney General Letitia James led a multistate coalition in submitting an amicus brief to the Supreme Court, urging the Court to overturn a decision by the U.S. Court of Appeals for the Fifth Circuit that threatens the future operation of the Consumer Financial Protection Bureau (CFPB) and the viability of more than ten years of the agency’s regulatory and enforcement actions. The CFPB was set up to create nationwide consumer protection standards and to work with, and supplement, individual state agencies. In Consumer Financial Protection Bureau v. Community Financial Services Association of America, Ltd., the Fifth Circuit concluded that the agency’s operations violate the U.S. Constitution’s Appropriations Clause because it does not receive an annual appropriation from Congress and is instead funded through the Federal Reserve, and ordered that a payday lending regulation created by the agency be vacated. Attorney General James and the coalition of 24 attorneys general urge the Supreme Court to reverse the decision by the Fifth Circuit because it jeopardizes the beneficial consumer protection and regulatory actions taken by the CFPB. 

“The CFPB has proven that it is able to stand up for consumers and help states, including New York, to ensure that our residents are protected,” said Attorney General James. “That is why opponents are attacking the agency, and that is why I am proud to push back on these brazenly anti-consumer protection efforts. I will continue to work with my fellow attorneys general to defend the CFPB and ensure it is able to work with our respective states to help protect consumers throughout the country.”

In the aftermath of the 2008 financial crisis, Congress established the CFPB to play a critical role in the stability of key sectors of the financial market and protect consumers against unfair and abusive business practices. Since its establishment, the CFPB has created and enforced nationwide consumer financial standards in areas ranging from mortgage lending requirements to debt-collection practices. Additionally, many CFPB regulations target financial sectors where individual states may face challenges in regulating fraudulent and abusive practices.

Attorney General James and the coalition note that if the appellate court decision takes effect, it could drastically restrict consumer protection efforts in their states, and would harm millions of Americans. The Fifth Circuit had invalidated a prior regulation issued by the CFPB, after concluding that the CFPB’s funding was unconstitutional. Attorney General James and the coalition caution that this approach, if adopted by the Supreme Court, could result in the invalidation of numerous CFPB rules and other regulatory actions. That result would harm millions of consumers around the country, while destabilizing the consumer financial sector. The amicus brief argues that this result is not mandated by the U.S. Constitution.

Leading this coalition of 24 attorneys general is part of Attorney General James’ ongoing efforts to protect consumers. As part of the Office of the Attorney General, Attorney General James oversees the Consumer Frauds and Protection Bureau, which prosecutes businesses and individuals engaged in fraudulent, misleading, deceptive, or illegal trade practices and helps mediate thousands of complaints each year from individual consumers. Attorney General James regularly issues important alerts regarding potential scams and efforts to harm New York consumers, and has also worked closely with the CFPB. In January, Attorney General James and the CFPB sued Credit Acceptance Corporation (CAC), one of the nation’s largest subprime auto lenders, for deceiving thousands of low-income New Yorkers into taking out high-interest car loans. In May 2022, Attorney General James and the CFPB shut down a predatory debt collection operation that used deceptive and abusive tactics to illegally collect millions of dollars from hundreds of thousands of consumers. In April 2022, Attorney General James and the CFPB filed a lawsuit against MoneyGram International, Inc. and MoneyGram Payment Systems, Inc. (MoneyGram) — for repeatedly violating consumer protection laws.

Joining Attorney General James in filing today’s amicus brief are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Hawaiʻi, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, Wisconsin, and the District of Columbia.

This matter is being handled by Senior Assistant Solicitor General Dennis Fan, Deputy Solicitor General Ester Murdukhayeva, and Solicitor General Barbara D. Underwood — all of the Division of Appeals and Opinions.