Glossary

Consumer Financial Protection Bureau (CFPB)

The Consumer Financial Protection Bureau advocates for buyers in the U.S. market. It sums this up with the tagline: On your side through life’s financial moments. As a respected government agency, the CFPB has built a strong reputation for recognizing and protecting the best interests of Americans across all industries.

History of the Consumer Financial Protection Bureau

Congress established the agency in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This act was passed in response to the Great Recession, which highlighted the need for more regulation of financial institutions to protect consumers from fraudulent or predatory practices.

A director heads the CFPB. The President appoints this person and the Senate confirms them. The bureau is responsible for enforcing consumer financial protection laws and regulations and educating the public about their rights regarding financial products and services.

The CFPB has taken several steps in its short history to protect consumers from unfair or deceptive practices. For example, the bureau finalized a rule in 2017 that prohibits financial institutions from using mandatory arbitration clauses to prevent consumers from filing class-action lawsuits. The CFPB has also issued rules regulating the payday lending industry.

What the Consumer Financial Protection Bureau Does

The CFPB’s mission is to make markets for consumer financial products and services work for Americans. whether they are shopping for a mortgage, taking out a student loan, or using a credit card. To accomplish this, the CFPB takes the following actions:

  • Enforces consumer protection laws
  • Regulates financial institutions
  • Educates consumers about their rights
  • Researches consumer behavior
  • Supervises companies for compliance with consumer protection rules
  • Builds coalitions with state and local organizations to protect consumers better

Consumer Financial Protection Bureau Rules

The CFPB has issued several rules to protect consumers from unfair, deceptive, or abusive practices. Here are some of the most well-known examples:

  • The Mortgage Servicing Rule: This rule requires mortgage servicers to provide borrowers with clear and timely information about their loan accounts and prohibits servicers from engaging in certain practices that can harm borrowers, such as failing to credit payments or improperly charging fees.
  • The TILA-RESPA Integrated Disclosure Rule: This rule streamlines the disclosure process for home buyers by combining two existing disclosures – the Real Estate Settlement Procedures Act disclosure and the Truth in Lending Act disclosure into a single document.
  • The Know Before You Owe Mortgage Disclosure Rule: This gives consumers more time to review and understand their mortgages’ key terms before committing to the loan.
  • The Payday Lending Rule: This rule requires lenders to assess a borrower’s ability to repay a payday loan before making the loan and imposes restrictions on how often a borrower can take out successive loans.

Consumer Financial Protection Bureau Compliance

The CFPB oversees commercial activity to ensure compliance with consumer financial protection laws. The companies they review include mortgage lenders, payday lenders, student loan servicers, debt collectors, and credit reporting agencies.

Its supervisory authority allows the CFPB to take several actions to ensure compliance with consumer financial protection laws, including on-site examinations, off-site monitoring, and investigations. Additionally, the CFPB can enforce consumer protection laws through administrative actions and civil lawsuits.

Consumer Financial Protection Bureau Enforcement

The CFPB takes enforcement action against companies that engage in unfair, deceptive, or abusive practices. The bureau has the authority to file lawsuits on behalf of consumers and can impose civil penalties on companies that violate the law. The CFPB has brought several high-profile enforcement actions against companies in the financial services industry, including payday lenders, student loan servicers, and credit card issuers.

The CFPB also accepts complaints from consumers about financial products and services. This can lead to lengthy and complex investigations of businesses. Investigators will note any instances of non-compliance at that time. 

If your business provides financial products or services to consumers, it is crucial to stay up-to-date on the latest CFPB developments. Doing so ensures compliance with all applicable laws and regulations.

How Message Capturing and Archiving Helps With CFPB Compliance

Message archiving is the capturing, storing, and indexing of electronic communications, such as chat, and instant text messages. It can help you meet your compliance obligations under the CFPB rules by preserving communications related to consumer financial products and services. Your team can then search for and retrieve archived messages, which is helpful for investigations and audits.

Are you ready to put this tool to use in your business? Book your free LeapXpert demo to get started.