A group of 17 state attorneys general issued a letter to the White House on December 12, promising that they will "continue to vigorously enforce consumer protection laws regardless of changes to the [Consumer Financial Protection] Bureau's leadership or agenda." The letter, coupled with other efforts, shows that regulatory relief in Washington may be offset by increased activity at the state level.
Expressing concerns regarding President Trump's appointment of Mick Mulvaney as Acting Director of the CFPB, the attorneys general noted that they "retain broad authority to investigate and prosecute those individuals or companies that deceive, scam, or otherwise harm consumers. If incoming CFPB leadership prevents the agency's professional staff from aggressively pursuing consumer abuse and financial misconduct, we will redouble our efforts at the state level to root out such misconduct and hold those responsible to account."
Led by New York A.G. Eric Schneiderman, the coalition includes attorneys general from California, Connecticut, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Mexico, North Carolina, Oregon, Vermont, Virginia, Washington, and the District of Columbia. The coalition formed in response to a November 27 letter supporting Mulvaney from attorneys general from West Virginia, Texas, Alabama, Arkansas, and Oklahoma. The earlier letter supported President Trump's appointment, saying Mulvaney would help curb "the CFPB's practice of overreaching regulation that harms the interests of consumers and small financial institutions."
The December 12 letter foreshadows a new wave of state enforcement of consumer protection laws following the election of President Trump. Among other powers, states can taking advantage of a little-known provision of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB, that gives state attorneys general the authority to enforce the CFPB's rules and its broad ban on "unfair, deceptive, and abusive acts or practices," commonly referred to by the acronym "UDAAP".
There are other signs of plans for increased state-level enforcement activity. For example, Pennsylvania A.G. Jack Shapiro has been quickly building up his own consumer finance unit since taking office nearly a year ago. The Pennsylvania unit is staffed with more than a dozen people and led by a former senior CFPB attorney. Shapiro and his team have already filed cases against a student loan servicer, which is accused of deceiving borrowers in order to drive up profits, and are leading a 48-state investigation into the security hacking of a consumer credit bureau.
"We're demonstrating a capacity to handle these big, complex, consumer financial protection cases," Shapiro told Reuters, adding that attorneys general from both parties have asked about how they can "mimic our efforts."
In Washington state, Attorney General Bob Ferguson has enlarged his consumer finance division to 27 attorneys, compared to 11 attorneys in place four years ago. Similarly, California A.G. Xavier Becerra has promised to "carry the torch and build on [former CFPB] Director Cordray's good work to protect and empower consumers."
"Regardless of what President Trump and the CFPB do moving forward," said Virginia A.G. Mark R. Herring, "my fellow attorneys general and I remain committed to fighting to protect consumers across the country, and we will not waver from that commitment." Herring, like many of his counterparts nationwide, has also reorganized and expanded his state consumer protection organization in the wake of the election of President Trump.
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