The Consumer Financial Protection Bureau (CFPB) released a comprehensive report today, outlining detailed recommendations to strengthen state-level consumer protection laws and address modern risks in consumer financial markets. The CFPB also provided a compendium of guidance documents summarizing its enforcement strategies and regulatory insights, designed to serve as a resource for state lawmakers and regulators.
The report identifies areas of growing concerns such as increased market concentration, misuse of consumer data for targeted advertising, and the proliferation of junk fees, all of which necessitate stronger consumer protections to ensure fair competition and transparency.
Key recommendations from the report include:
- Adopting the “abusive” standard: States are encouraged to incorporate the prohibition of “abusive” acts or practices into their statutes, a concept central to the CFPB’s enforcement under the Consumer Financial Protection Act (CFPA). This standard addresses harmful tactics such as dark patterns, excessive reliance on consumer misunderstanding, and exploitation of unequal bargaining power, without requiring proof of consumer harm. (See discussion on CFPB’s Policy Statement on Abusiveness here).
- Removing barriers to effective enforcement: The CFPB recommends that states grant their attorneys general broad investigative powers, including pre-suit subpoenas, and the authority to pursue equitable relief, punitive damages, and revocation of corporate charters for egregious violators. States are also urged to establish consumer restitution funds, modeled after the CFPB’s Civil Penalty Fund, to compensate victims when offenders cannot.
- Cracking down on junk fees: The CFPB advocates for explicit bans on hidden and misleading fees that obscure the true cost of goods or services, and on price-gouging tactics that exploit captive consumers. For example, it suggests requiring businesses to prominently disclose total prices upfront and prohibiting fees for services reasonably expected to be included in the advertised cost. (See discussion on the CFPB’s crackdown on junk fees here, here, here and here).
- Enhancing consumer data privacy: The CFPB encourages states to create enforceable rights for consumers, including the ability to delete, correct, and control the use of their personal data. It also recommends prohibiting the sale of sensitive data to third-party brokers and limiting the use of such data for targeted advertising or discriminatory pricing practices. (See discussion on states’ consumer privacy legislative efforts here and here).
The CFPB also recommends that states eliminate burdensome proof requirements that hinder enforcement, such as the need to prove monetary injury or consumer reliance on misleading claims. Additionally, the Bureau urges states to expand consumer protection laws to safeguard small businesses and to allow private causes of action, enabling individuals to hold violators accountable through direct litigation.
Additionally, the CFPB’s report highlights its strong partnerships with state regulators, which have significantly bolstered enforcement and consumer protection capabilities.
Putting It Into Practice: The CFPB’s report includes specific model language recommended by the CFPB, such as definitions of “abusive” practices and provisions to address junk fees, which can provide a helpful starting point for lawmakers drafting or revising consumer protection statutes. With more tools, resources, and collaborative frameworks than in the past, Bureau leadership is hoping that state regulatory bodies are likely better equipped now to continue fill in the potential regulatory gap resulting from a new administration.