U.S. Supreme Court finds protecting consumers through CFPB is constitutional

May 17, 2024

---

Since its creation, the CFPB has won more than $19 billion in relief for U.S. consumers.

After a suit brought by short-term lenders against the Consumer Financial Protection Bureau, the Supreme Court has upheld the constitutionality of the funding method Congress chose for the CFPB, allowing this vital agency to continue its work in holding Wall Street and predatory lenders to account, and promoting economic and racial justice.

“This is a win for consumers in Maine and around the country,” says Nora Flaherty-Stanford of Maine People’s Alliance. “The CFPB protects us from being taken advantage of in a myriad of ways, and the payday lending industry’s efforts to challenge the agency’s constitutionality were both disingenuous and, frankly, offensive to everyone who uses the financial services industry – that is, most of us.” 

The case came after the Community Financial Services Association, an association of payday lenders, filed suit against the CFPB over a regulation that prohibited lenders from withdrawing funds from consumer accounts after two failed attempts due to lack of funds. The group 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. 

Many experts and organizations filed amicus briefs at the high court outlining the flaws in CFSA’s logic. 

One such group was the Americans for Financial Reform Education Fund (AFREF), a national partner with MPA on consumer protection issues.“The CFPB’s wide and varied work in support of greater racial equity in financial services is a central pillar of its efforts,” said Amanda Jackson, consumer campaign director at AFREF. 

“But, precisely because the CFPB stops big banks and predatory financial companies from ripping people off, extracting fees from those who can least afford it, and increasing the racial wealth gap it will continue to draw attacks from the industries it regulates and policy makers who side with them. Among other things, Wall Street and predatory lenders will keep going to the corporate friendly Fifth Circuit to try to stop CFPB actions to protect the public. Our big and diverse coalition is going to keep pushing back so we can build more financial security and a fairer economy for all of us.”  

SInce its creation the CFPB has won more than $19 billion in relief for consumers ripped off by big banks and other financial wrongdoers. Recently the agency has pursued policies to rein in junk fees that cost families tens of billions of dollars each year, including by finalizing a rule to cap excessive credit card late fees, and proposing limits on 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.

####

Maine People’s Alliance (MPA) was founded in Lewiston in 1982 and has grown to be the largest community organization in Maine, and one of the largest in the country. MPA is a powerful grassroots network of more than 32,000 members who work together on issues that include but are not limited to climate change, toxics use reduction, health care access, affordable housing, racial justice, and immigrant rights.

####

Contact: Nora Flaherty-Stanford, [email protected], (207) 370-8314