Brooke Conkle and Chris Capurso explore the Consumer Financial Protection Bureau's (CFPB) recent memo detailing its supervision and enforcement priorities for 2025.
In this episode of Moving the Metal: The Auto Finance Podcast, Brooke Conkle and Chris Capurso explore the Consumer Financial Protection Bureau's (CFPB) recent memo detailing its supervision and enforcement priorities for 2025. They discuss the implications for the auto finance industry, focusing on the CFPB's expected – and unexpected – shifts for the year, including the Fair Credit Reporting Act and data furnishing issues, and the ongoing scrutiny of fees. Brooke and Chris analyze the impact of federalism on regulatory practices, highlighting the CFPB's approach to state authority and joint examinations. They also examine the shift toward consumer remediation over penalties. Tune in to understand how these priorities might affect your business operations and compliance strategies in the coming years.
Moving the Metal: The Auto Finance Podcast — Under the Hood: Exploring the CFPB’s 2025 Focus
Hosts: Brooke Conkle and Chris Capurso
Recorded: 4/30/25
Aired: 5/20/25
Brooke Conkle:
Welcome to Moving the Metal, the premier legally-focused podcast for the auto finance industry. I'm Brooke Conkle, a partner in Troutman Pepper Locke’s Consumer Financial Services Practice Group.
Chris Capurso:
And I'm Chris Capurso, an associate in Troutman Pepper Locke’s Consumer Financial Services Practice Group.
Brooke Conkle:
Today, we'll discussing the CFPB's recent memo on 2025 supervision and enforcement priorities.
But before we jump in, let me remind you to please visit and subscribe to our blogs. We have two great ones that may be of interest to you, TroutmanFinancialServices.com and ConsumerFinancialServicesLawMonitor.com. Also, we have a bevy of other podcasts that you might find interesting. The Consumer Finance Podcast, which, as you might guess, is all things consumer finance related. The Crypto Exchange, devoted to trends, challenges, and legal issues in Bitcoin, blockchain, FinTech, and RegTech. FCRA Focus, a podcast dedicated to all things credit reporting. Unauthorized Access, a deep dive into the personalities and issues in the privacy, data, and cybersecurity industry. And finally, Payments Pros, a great podcast focused exclusively on the payments industry. All of these insightful shows are available on your favorite podcast platform, so check them out.
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Brooke Conkle:
For today, as I mentioned, we'll be discussing the Bureau's internal memo regarding supervision and enforcement priorities. Chis, tell us a little bit about this memo, and where did it come from, how did we get here.
Chris Capurso:
Sure. So, in the most literal sense, it came from Mark Paoletta, who is The Chief Legal Officer, GC of, actually, the Office of Management and Budget. As probably most people will know, Russell Vought, who is the current director of that department, OMB, is the current acting director of CFPB. So, Mark Paoletta now has two hats, much like his boss, Director Vought. The more interesting aspect of this is this agenda was attached in a declaration Mark Paoletta made in the lawsuit that is currently going on between the CFPB's employees and the CFPB, which is National Treasury Employees Union versus Vought. This was added to the record as sort of a basis or justification for the reduction in force.
Now, for those paying attention, we have tons of blogs on this, so come check out our blog, which I'm going to mention later. But it's kind of hard to keep score with so many things happening. There was a reduction in force earlier in the year that got paused, and then, there was an even larger one more recently that was also put on pause. But this agenda was put in place to sort of justify why there was a reduction in force. You'll understand when we start talking about what these priorities are, but the basis is, the CFPB isn't going to need as many people to carry out its administrative priorities.
Brooke Conkle:
That's right. And what those administrative priorities are, frankly, is a little bit surprising. So, Chris, as you mentioned, the Bureau in this memo sets out some specific areas that it intends to make priorities for 2025. It specifically called out as the highest priority is mortgages. Then, following that, the FCRA Regulation V and data furnishing issues. This was essentially credit reporting. Third, FDCPA and Regulation F relating to consumer contracts and debts. D, we'll talk about in a little bit, but this one was a little bit surprising. Various fraudulent overcharges and fees. We've heard that word before, Chris.
Chris Capurso:
What are fees?
Brooke Conkle:
Then, lastly, inadequate controls to protect consumer information resulting in actual loss to consumers. We'll talk about that phrase actual loss in a little bit as well. But really, what the Bureau is doing here is kind of level setting and outlining the specific areas where it will be focusing its attentions. As we are going to talk about, actual damages and actual monetary harm is really kind of interwoven throughout this memo. The memo itself is pretty short, but in many ways, it's an answer to one of the final memos that the Chopra-led Bureau put out early in the year, essentially kind of deputizing states to essentially act in the CFPB's stead with the administration change. So, Chris, tell us a little bit about what is not part of the new agenda for this CFPB.
Chris Capurso:
So, this agenda is outlined in kind of 11 bullet points and it's kind of buried towards the end. But one of the big ones is the certain categories that are going to be deprioritized. Some of these should not be a surprise, but some of them are a little bit interesting, and I'll go through them. I mean, some of this may not impact our listeners as much, but with the way the CFPB was before, and the potential for jumping into industries that they normally wouldn't jump into, maybe these would have been relevant. Now, maybe they aren't so much. But we have loans or other initiatives for "justice involved "individuals (criminals), medical debt, peer-to-peer platforms and lending, which is something you absolutely could see impacting auto-finance, student loans, remittances, like remittance transfers, consumer data, which is, I'll circle back to that, and digital payments.
Consumer data is, to me, I don't know about anybody else, to me, the strangest one here. One, consumer data is a very broad term. It could cover literally anything, which is especially interesting because as Brooke just noted, FCRA furnisher is a priority. That is the furnishing of consumer data. Who knows where exactly this consumer data bullet point is headed as we've discussed on these connected cars, things like that. There's a lot of consumer data in cars, not to mention the amount of consumer data that dealers and finance companies have on hand, not only to comply with laws and regulations, but also potentially for marketing purposes, things like that. It's hard to tell what exactly consumer data means in terms of them deprioritizing it.
But those are kind of the outlined, stated out loud, deprioritized items. But there are some other things noted in the agenda that the CFPB will not be pursuing, one of which is novel theories under the law. So, think any time you've seen in this last administration or when Director Cordray was there, any of the times where you get the kind of enforcement by blog post or you get these kinds of tenuous links to basic CFPB statutory authority to regulate or supervise certain types of entities. That's probably where this is coming from. This would also feed into, we've discussed this several times, not that it's a CFPB action, but the FTC as Chairperson Ferguson has continually mentioned this idea of pursuing discrimination under UDAP theory. It's continually talked about as a novel theory of enforcing that, especially when there are civil rights laws. I mean, the CFPB is the one who first started this. They had their bullets in a couple of years ago about discrimination being a UDAP. So, you can guess we're not going to be seeing a whole lot of that with this current CFPB.
Another one I just wanted to note was, the CFPB is not going to be looking for cases where consumers made the wrong choice. This has always been kind of a push and pull. Are you giving the consumers enough credit for being – and this is not a pun credit, this is credit as in, what are they able to understand? Are they a reasonable consumer? There's always this, like I said, push and pull where you don't assume that consumers don't read these things, or like, there should be a level where businesses can rely on the consumer to actually read the documents that they are signing their name to and understand those documents.
Sometimes, the CFPB gets into more of a paternal role where there are just these consumers know not what they do, and that we need to protect them. If there's anything in here, like if they made the wrong choice or they just – it didn't go their way, it's on the business. That's a very hard environment for a business to operate in. I think most people will agree. So, the CFPB specifically notes that it's not going to be looking to police businesses when a consumer makes a wrong choice. It's going to be more about the wrongdoing of the business, not necessarily whether the consumer knows or doesn't know exactly what they're getting into, and whether it was the right thing for them at the time. But those are kind of the big things that I would notice not being part of the agenda. But Brooke, what's still in – I mean, you alluded to this, so there's kind of a teaser earlier, but what's still in there that's surprising to you?
Brooke Conkle:
Yes. When I saw that word fees, I will admit, I was surprised by that. The war on fees was really one of the hallmarks of the Chopra-led CFPB. Some of that sort of war was fair. It really was targeting fees that consumers could not avoid by their own activities, fees that were not properly disclosed, fees that could legitimately be termed junk fees. But I think for a lot of us, we felt that that term junk fees really suddenly started to encompass a lot of fees that were legitimate, that had been properly disclosed, and were fees that consumers could avoid through their own behaviors.
Seeing that really number four on the Bureau's list here is various fraudulent overcharges and fees. Frankly, that surprised me. I was not expecting the new version of the CFPB to still include that as one of their agenda items. For me, that was surprising. Then, secondly, as we discussed earlier, there is a specific statement in here. The Bureau will respect federalism. Essentially, under that heading, the CFPB has stated, essentially, it will deprioritize supervision where states have and exercise ample regulatory and supervisory authority. For me, that was not surprising necessarily, but a call out that I did not expect. Because you often think, okay, as the federal regulators are receding, the states are coming in to fill that void. Oftentimes, there can be sort of pushback on state overreach, perhaps.
But this version of the CFPB is saying, no, that's how federalism works, and if you have a state that is aggressive, that is really pushing its own regulatory agenda, the Bureau is not going to step in and essentially tell them not to do that. We have this push and pull, just as you mentioned, Chris, where now we have a patchwork regulatory regime, and the CFPB is saying, "Yes, that's how we do things. That's okay, guys."
Chris Capurso:
With Brooke taking what's surprising, I'll take the counter and take what's not surprising. The first thing right at the top that I think is completely unsurprising is, the CFPB said that it will focus on veterans and service members. Whatever we talk to people, even before the election about what could change if the administration changes, what could not change. The number one item in the could not change category is a focus on veterans and service members. That is such a bipartisan area that everybody in government cares about. So, it is totally unsurprising that the Bureau will still be looking at service members.
So, in our instance with auto finance, think repossession, think servicing issues. And as Brooke mentioned, like FCRA furnisher type issues, anything like that with a service member, you could still see some probably pretty hefty actions. Because if there's a prioritizing of service member rights, just because maybe the prior Bureau looked at, like for example, in the supervisory highlights from last year, repossession was a big category. That's not to say it's not going to still be a big category going forward. We just may see more of it, specifically tailored to service members because the CFPB has specifically called that out.
Another one, and I thought this was interesting because Brooke mentioned the idea of federalism and the surprising part of it being that the CFPB is hyping up states' rights. What's not surprising for public administration is, this idea of removing the joint exams, and joint supervision with the states. Exactly what Brooke said, the prior Bureau under Director Chopra, really advocating for banding together, and having these actions, and these investigations, and everything else.
The Care Bureau, let's not do that. Let's continue in our separate ways. I mean, the Bureau specifically noted in its section on federalism in this agenda that it will deprioritize participation in multi-state exams unless required, that's required by statute, deprioritize supervision where States have and exercise ample regulatory and supervisory authority. Again, unless required by statute. And the Bureau will minimize duplicative enforcement where State regulators or law enforcement authorities are currently engaged in or have concluded an investigation in the same matter.
They're really, by the text, they're just trying to avoid duplication and kind of this working together. It'll be interesting to see how it works in practice because, I mean, we love to talk about this. States have UDAP authority too. So, States have exercised that ample regulatory and supervisory authority related to their UDAPs. Does that mean the CFPB is not going to do the same? Obviously, this is a very outlined document. I mean, it is three pages. So, there's not a whole lot of color on it. We don't have commentary, what some of this stuff means, but it'll be interesting to see how it comes out in practice.
Another one that I found really interesting was this memo specifically says that the CFPB will be focusing more on remediation as opposed to penalties, and discusses the Civil Penalty Fund. For those who are aware, obviously, the Project 2025 document is seen to be a sort of playbook for this administration and the CFPB makes an appearance in Project 2025. I'm going to just read a couple excerpts on civil penalties from that. because it really feeds into this idea that's coming out in the agenda. The exact quote is, “the CFPB collects fines from the private sector that are put into the Civil Penalty Fund. The fund serves two ostensible purposes, to compensate the victims whom the CFPB perceives to be harmed, and to underwrite "consumer education" and financial literacy programs.”
“How the Civil Penalty Fund is spent is at the discretion of the CFPB Director. The CFPB has been unclear as to how it decides what consumer education or financial literacy programs to fund. As noted, critics have charged that money from the Civil Penalty Fund has ended up in the pockets of leftist activist organizations”. So, that's straight out of Project 2025. Then, as an action item, the quote is, "ensure that any civil penalty funds not used to recompense wronged consumers go to the Department of the Treasury, that the funds should not be retained by the Bureau to be dispensed at the pleasure of the director, potentially to political actors. Moreover, the CFPB should not have a financial incentive to impose penalties."
That's what Project 2025 says, and now, we have this agenda saying, we're looking more to get money back into consumers' pockets rather than imposing penalties on companies in order to simply fill the Bureau's penalty fund. So, this is just straight out of the Project 2025 outline. We're going to focus more on getting consumers their money, we're going to focus much less on filling up the penalty fund, even though I believe the penalty fund is used to recompense consumers in some instances, but it's just straight out of Project 2025.
The final topic that I'll discuss actually goes right along with the Project 2025 idea. This memo is still a reaction to the Chopra CFPB, which is not a surprise at all. Obviously, many in industry and elsewhere felt that the Chopra CFPB went beyond its boundaries. It went a little bit too far. Now, we have the natural reaction, which is to dial back significantly. In Project 2025, this is just kind of a note for the future. I'm curious where this is going to go. In Project 2025, they noted that the CFPB should quote specify the nature of UDAP to define the scope of the CFPB mission more precisely. That's not in here. That's not in this agenda. So, I'm curious in the future, whether we're going to be getting, I don't know, some kinds of declarations, or bulletins, or something to more specifically define UDAP. Because as everybody knows, UDAP is kind of the "you know it when you see it" kind of violation that the CFPB likes to play with.
Are we going to see more definitions of what that means. That's especially interesting given the discussion I just had about federalism and talking about state authority. Are they going to mesh? Are they not going to mesh? So, a lot of interesting points being brought up by this agenda and also based on prior history, which it seems some of this agenda is coming from. But we've talked a lot about the agenda, and where it comes from, and what we think it says. As we said, there's no commentary. But what does this mean for our listeners, for auto finance companies?
Brooke Conkle:
Yes. For dealers and auto finance companies, I think kind of the biggest headline is that the Bureau's highest priority initiatives are not necessarily topics that are relevant for auto finance or dealers, specifically mortgages. Mortgages are outlined as getting the highest priority, so maybe auto finance companies, maybe not really on the CFPB's radar. But the things that are on the Bureau's radar that are relevant are FCRA and data furnishing violations, and then, as we've talked about, fees.
For the FCRA, that really goes to kind of furnisher activities, how are auto finance companies providing consumer data to the consumer reporting agencies, whether there are adequate controls to protect consumer information. And, essentially, are auto finance companies getting that reporting right? Are they sending the right stuff to the consumer reporting agencies? Are they responding to direct or indirect disputes of consumer reporting information?
Then, secondly, we have this bullet point on fraudulent overcharges and fees. As we've discussed, the interest from the Chopra-led Bureau in fees, frankly, is still a priority for this CFPB. It may not be to the extent that it was in the past four years, but fees are still going to be under regulatory scrutiny. So, disclosures and how consumers are made of aware of required fees and not required fees. What are they for? Who's getting the money for it? Are the consumers aware of the fees before the transaction is completed? All of those disclosure related activities are still going to be important in this version of the CFPB.
Chris Capurso:
With that, that'll wrap it up for today's podcast. Thank you to our audience for tuning in. Don't forget to check out our blogs where you can subscribe to the entire blog or just the specific content you find most helpful. That's the ConsumerFinancialServicesLawMonitor.com and the TroutmanFinancialServices.com blogs. Those are where you're going to go to get the scorecard on everything that's going on with the CFPB, as I mentioned earlier. While you're at it, why don't you head on over to troutman.com and sign up for our consumer financial services mailing list, so you can stay abreast of current issues with our insightful alerts and advisories, and receive invitations to our industry insider webinars.
Of course, please mark your calendars for this podcast, Moving the Metal, which we will be releasing every two weeks in 2025. That will be generally on the second and fourth Tuesdays of each month. This upcoming weekend after this podcast releases is Memorial Day, which hopefully, most people listening know that Sunday is the best racing day of the year with the 109th running of the Indianapolis 500, the Monaco Grand Prix, and the Coca-Cola 600. So, hopefully, everybody enjoys that. As always, if you have any questions or if we can help in any way, please reach out to us. Until next time.
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