U.S. Supreme Court delivers good news for consumers and fair business practices, but expect more industry pressure on CFPB

The Supreme Court today upheld the constitutionality of the funding method Congress chose for the Consumer Financial Protection Bureau, allowing a vital agency to continue its work in holding Wall Street and predatory lenders to account, and promoting economic and racial justice.

“The CFPB ensures that markets for consumer financial products are fair, transparent, and competitive. This is good for Virginia consumers, as well as Virginia businesses that follow the law and do not try to trick consumers,” said Jay Speer, Executive Director of Virginia Poverty Law Center. “This decision is needed because it will allow the CFPB to continue standing up for the public interest against abusive financial practices and hold unlawful business practices accountable.”

The case stems from a lawsuit against the CFPB brought by the Community Financial Services Association over a regulation that prohibited lenders from withdrawing funds from consumer accounts after two failed attempts due to lack of funds. CFSA, a lobby group for payday lenders, argued that the CFPB’s funding, which is drawn from the Federal Reserve, is unconstitutional.

The payday lenders prevailed in the Fifth Circuit Court of Appeals and the Department of Justice appealed the case to the Supreme Court. Virginia Poverty Law Center, together with many other experts and organizations joined amicus briefs at the high court outlining the flaws in the payday lenders’ argument.

“The CFPB has put billions of dollars back in Virginia consumers’ pockets and is on the verge of saving consumers billions more by limiting bank overdraft junk fees and credit card fees,” said Dana Wiggins, Director of the Center for Economic Justice at VPLC.

The CFPB is especially important to Virginia’s large military population.  The CFPB put a halt on illegal debt collection practices such as debiting their accounts without authorization and contacting servicemembers’ commanding officers servicemembers’ commanding officers.

Since its creation the CFPB has won more than $19 billion in relief for consumers ripped off by big banks and other financial wrongdoers. CFPB is pursuing policies to rein in junk fees that cost families tens of billions of dollars each year, with rules capping excessive credit card late fees and limiting punitive overdraft fees. Other key initiatives include requiring fairer credit reports, reducing the harm of medical debt collections, fighting inequity in home appraisals, increasing consumer rights to control their own data and much more.

Media Contact: Connie Stevens, connie@vplc.org, 540.354.8597