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Agency Trump and Musk Want to 'Delete' Set to Deliver $1.8 Billion to Scammed US Consumers
"When the Consumer Financial Protection Bureau is allowed to fully do its job, Americans only stand to benefit."
Dec 06, 2024
In the coming weeks, as President-elect Donald Trump's second term approaches and his pledge to dismantle key agencies potentially comes closer to fruition, 4.3 million consumers are set to receive checks from one of the agencies the incoming administration wants to "delete."
The Consumer Financial Protection Bureau (CFPB) announced Thursday that it will soon begin distributing a historic $1.8 billion to millions of people who were charged illegal junk fees or defrauded by credit repair companies including Lexington Law and CreditRepair.com.
The money will be distributed from the CFPB's victim relief fund, which was created by Congress and is financed entirely by civil penalties paid by companies and individuals who violate consumer financial protection laws.
The fund has distributed $3.3 billion to consumers since its inception, and the CFPB said the forthcoming payment will be its largest ever.
"Lexington Law and CreditRepair.com exploited vulnerable consumers who were trying to rebuild their credit, charging them illegal junk fees for results they hadn't delivered," said CFPB Director Rohit Chopra. "This historic distribution of $1.8 billion demonstrates the CFPB's commitment to making consumers whole."
A district court ruled in August 2023 that the two companies had violated the Telemarketing Sales Rule's prohibition on advance fees, which bars credit repair firms from collecting fees from consumers until they prove they have achieved the results they promise to their customers.
If the CFPB payments are divided equally among those who were wrongly charged fees by the two companies, each consumer would receive about $419.
The payments are being sent days after the CFPB proposed a rule aimed at reining in data brokers who sell people's personal information.
As Common Dreamsreported, billionaire entrepreneur Elon Musk has expressed concern about the practices of data brokers—but as Trump's nominee to co-lead the Department of Government Efficiency (DOGE), a yet-to-be-created commission that would cut regulations and government spending, Musk has pledged to "delete" the CFPB.
Filmmaker and media activist Danny Ledonne said Musk and Vivek Ramaswamy, another businessman nominated to lead DOGE, likely want to do away with the CFPB because the agency acts "in the interest of regular people."
Liz Zelnick, director of the Economic Security and Corporate Power Program at government watchdog Accountable.US, said the upcoming $1.8 billion payout shows why the CFPB should remain in operation.
"When the Consumer Financial Protection Bureau is allowed to fully do its job, Americans only stand to benefit," said Zelnick. "Between surprise fees and misleading business practices, today's victory affirms the importance of the CFPB for defending people across the country from shady industry actors."
Rep. Mark Pocan (D-Wis.) said supporters of consumer protections in Congress will "fight any attempts to dismantle [CFPB], whether from Trump, Musk, or their billionaire buddies."
"The CFPB fights for everyday Americans against corporate greed, junk fees, and predatory lenders," he said. "This watchdog agency protects normal people like you and me."
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What Will Trump and GOP Congress Do to the Consumer Financial Protection Bureau?
"Of course Trumpers want to dismantle the only agency formed in decades dedicated to giving consumers a fair shake in a predatory economy," one journalist said in response to reporting on Republican plans.
Nov 23, 2024
Just hours after U.S. President Donald Trumpnamed a labor secretary nominee seen by some union leaders and advocates as genuinely pro-worker, The Washington Post on Saturday detailed what the incoming administration and Republican Congress have planned for a federal agency designed to protect everyday Americans from corporate abuse.
Initially proposed by Sen. Elizabeth Warren (D-Mass.) while she was still a Harvard Law School professor, the Consumer Financial Protection Bureau (CFPB) was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which Congress passed in response to the 2007-08 financial crisis.
The first Trump administration was accused of "gutting the CFPB and corrupting its mission." However, as the Post noted, "its current Democratic leader, Rohit Chopra, has been aggressive" in his fights for consumers, working to get medical debt off credit reports and crack down on "junk fees" for everything from bank account overdrafts and credit cards to paycheck advance products—efforts that have drawn fierce challenges from the financial industry.
"Working- and middle-class people who voted for Trump did so for many reasons, but you'd be hard-pressed to find any who did so because they want higher overdraft fees."
Chopra, an appointee of outgoing President Joe Biden, isn't expected to stay at the CFPB, but Trump's recent win hasn't yet halted bold action at the agency. On Thursday, it announced plans "to supervise the largest nonbank companies offering digital funds transfer and payment wallet apps," which is set to impact Amazon, Apple, Block, Google, PayPal, Venmo, and Zelle, unless the Trump administration shifts course.
The Post reported that Republican leaders "intend to use control of the House, Senate, and White House next year to impose new restrictions on the agency, in some cases permanently," and "early discussions align the GOP with banks, credit card companies, mortgage lenders, and other large financial institutions."
According to the newspaper:
"There will be a pretty significant change from the direction the agency has been going in, and I think in a positive way," predicted Kathy Kraninger, who led the CFPB during Trump's first term. She now serves as chief executive of the Florida Bankers Association, a lobbying group whose board of directors includes top executives from Bank of America, JPMorgan Chase, PNC, and Truist.
Aides on Trump's transition team have started considering candidates to lead the CFPB who are expected to ease its oversight of banks, lenders, and tech giants. The early short list includes Brian Johnson, a former agency official; Keith Noreika, a banking consultant and former regulator; and Todd Zywicki, a professor at George Mason University's law school who has previously advised the bureau, according to four people familiar with the matter.
"Of course Trumpers want to dismantle the only agency formed in decades dedicated to giving consumers a fair shake in a predatory economy," Katrina vanden Heuvel, The Nation's editorial director and publisher, said in response to the reporting—which came just a day after Forbes similarly previewed "big changes coming to Elizabeth Warren's CFPB" when Trump returns.
"The number of CFPB regulatory advisories and enforcement actions will likely shrink" and "bank mergers and acquisitions could see a boost too," Forbes highlighted. "Even more noteworthy, the CFPB's funding structure could be at increased risk," with some congressional Republicans considering the reconciliation process as a path to forcing changes, following the U.S. Supreme Court's May decision that allowed the watchdog to keep drawing money from the earnings of the Federal Reserve System.
"Changing the CFPB's funding structure would be an uphill battle since it would be perceived by many as an attempt to take the bureau’s budget to zero," the magazine noted. "But the concept 'has been on every wish list I've seen from House Republicans for the last 10 years or more since its creation,' says a former Capitol Hill staffer who has worked with the House Financial Services Committee."
Warren, who won a third term in the Senate earlier this month, is optimistic about the agency's survival. "The CFPB is here to stay," she told the Post. "So I get there's big talk, but the laws supporting the CFPB are strong, and support across this nation from Democrats, Republicans, and people who don't pay any attention at all to politics, is also strong."
The senator's comments about the CFPB's popularity are backed up by polling conducted last weekend and released Thursday by Data for Progress. Although the progressive firm found that a plurality of voters (48%) lacked an initial opinion of the agency, they expressed support when introduced to major moves during the Biden administration.
"More than 8 in 10 voters support the CFPB's actions to protect Medicare recipients from illegal and inaccurate bills (88%), crack down on illegal medical debt collection practices like misrepresenting consumers' rights and double-dipping on services already covered by insurance (86%), publish a consumer guide informing consumers of the steps they can take if they receive collection notices for medical bills (84%), and propose a rule to ban medical bills from people’s credit reports (81%)," the firm said.
Data for Progress also found that voters back agency actions to "require that companies update any risky data collection practices (85%), rule that banks and other providers must make personal financial data available without junk fees to consumers (85%), confront banks for illegal mortgage lending discrimination against minority neighborhoods (83%), and state that third parties cannot collect, use, or retain data to advance their own commercial interests through targeted or behavioral advertising (80%)."
After learning about the watchdog's recent moves, 75% of voters across the political spectrum said they approve of the CFPB.
The polling came out the same day Warren addressed Trump's campaigning on a 10% cap for credit card interest rates.
"I can't imagine that President Trump didn't mean every single thing he said during the campaign," Warren
told reporters. She later added on social media: "If Donald Trump really wants to take on the credit card industry, count me in. The CFPB will back him up."
While Trump's latest electoral success was thanks in part to winning over key numbers of working-class voters, the president-elect has spent the post-election period filling key roles in his next administration with billionaires and loyalists, fueling expectations that his return to the White House—with a Republican-controlled Congress—will largely serve ultrarich people and corporations, reminiscent of his first term.
The recent reporting on the CFPB has further solidified those expectations. In a snarky social media post, Aaron Sojourner, a labor economist and senior researcher at the W. E. Upjohn Institute for Employment Research who served on the Council of Economic Advisers (CEA) during the Trump and Obama administrations, wrote: "#priorities Bringing back junk fees."
Joshua Smith, budget policy director for the Democrat-run Senate Budget Committee,
said that "working- and middle-class people who voted for Trump did so for many reasons, but you'd be hard-pressed to find any who did so because they want higher overdraft fees."
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Wall Street Banks Accused of Trying to Sabotage Key Consumer Protection Rule
"The CFPB must stop this ploy by the biggest banks to keep us trapped under their thumbs."
Nov 15, 2024
Consumer advocates applauded last month as the Consumer Financial Protection Bureau finalized a rule aimed at making it easier for people to switch financial institutions if they're unhappy with a bank's service, without the bank retaining their personal data—but on Thursday, more than a dozen groups warned the CFPB that major Wall Street firms are trying to stop Americans from benefiting from the rule.
Several advocacy groups, led by the Demand Progress Education Fund, wrote to CFPB director Rohit Chopra warning that major banks—including JP Morgan Chase, Bank of America, Citi, TD Bank, and Wells Fargo—sit on the board of the Financial Data Exchange (FDX), which has applied to the bureau for standard-setting body (SSB) status, which would give it authority over what is commonly known as the "open banking rule."
Standard-setting authority for the banks would present a major conflict of interest, said the groups.
The banks are also on the board of the Bank Policy Institute, which promptly filed what the consumer advocates called a "frivolous lawsuit" to block the open banking rule when it was introduced last month, claiming it will keep banks from protecting customer data.
At a panel discussion this week, Bank of America CEO Brian Moynihan also said the open banking rule, by requiring financial firms to unlock a consumer's financial data and transfer it to another provider for free, would cause "chaos" and amplify concerns over fraud.
"The American people are fed up with Wall Street controlling every aspect of their lives and the open banking rule is an opportunity to give all of us some financial freedom."
The groups wrote on Thursday that big banks want to continue to "maintain their dominance by making it unduly difficult for consumers to switch institutions."
"The presence of these organizations on both the FDX and BPI boards undermines the credibility of FDX and presents various concerns relating to conflict of interest, interlocking directorate, and antitrust law," they wrote.
Upon introducing the finalized rule last month, Chopra said the action would "give people more power to get better rates and service on bank accounts, credit cards, and more" and help those who are "stuck in financial products with lousy rates and service."
The coalition of consumer advocacy groups—including Public Citizen, the American Economic Liberties Project, and Americans for Financial Reform—urged Chopra to reject FDX's application for standard-setting authority so long as the banks remain on its board.
“It would be a flagrant conflict of interest for the same banks who are suing to block the open banking rule because it threatens their market dominance to also be in charge of implementing it," said Demand Progress Education Fund corporate power director Emily Peterson-Cassin. "The American people are fed up with Wall Street controlling every aspect of their lives and the open banking rule is an opportunity to give all of us some financial freedom. The CFPB must stop this ploy by the biggest banks to keep us trapped under their thumbs."
The groups called the open banking rule "a historic step forward for the cause of giving consumers true freedom intheir financial lives."
"For this reason, it is imperative that SSB status not be granted to an organization whose board members are, either directly or through a trade association they are participating in, suing the CFPB to stop the rules from taking effect, particularly when such members may be ethically conflicted from such dual participation," said the groups. "By rejecting SSB status for FDX or any other organization with similar conflicts of interest pertaining to Section 1033, the CFPB will help prevent big banks from sabotaging open banking rules."
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