Your government slashed consumer protections. Now what?

In the same way people don’t think about their plumbing until a deathly stench rises from their shower drain, most of us have gotten used to the safeguards afforded by the federal Consumer Financial Protection Bureau — we’ve got backup if there’s a problem.

Among its service to American consumers: returning more than $21 billion to 205 million people; saving more than $5 billion by capping bank fees; fielding more than 6.8 million complaints about medical debt, student loan repayment and credit reporting; returning $183 million to veterans and service members for violations of the Military Lending Act; and removing $49 billion in medical collections from credit reports (anything under $500 cannot be included). Higher credit scores mean better rates and easier approvals on loans, credit cards and rentals.

The Trump administration has frozen the work of the CFPB (though there have been conflicting messages from the president himself), but only Congress can officially shut it down. It is funded by the nonpartisan Federal Reserve board to insulate it from politically driven fluctuations, and its fate hinges on a lawsuit brought by the National Employees Treasury Union that covers CFPB staff. A coalition of 23 state attorneys general submitted an amicus brief, arguing that shutting the bureau would cause catastrophic harm to consumers if oversight is left to the states. 

“The Trump Administration’s takeover of the CFPB is an effort to destroy the agency responsible for overseeing the mortgage markets, stopping predatory debt collectors, and preventing American families from being exploited by big banks and payday lenders,” said California Attorney General Rob Bonta in a statement. “From sharing complaints and trend data, to providing training, and partnering on joint investigations and litigations, the loss of CFPB’s partnership has devastating and deep implications for California and households across the nation." 

The Bureau was created in the wake of the 2008 financial meltdown after fiscal institutions extended too much risky credit to folks who were unable to repay and went wild with mortgage rates and fees, which sank real estate markets and sent people into stratospheric amounts of debt. Signed into law in 2010 and enacted in 2011 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has since established national bulwarks for consumers against high fees for credit cards, payday loans and banking transactions and overdrafts. 

But actually, the CFPB was a great investment that put money back in people’s pockets. Since its inception, taxpayers spent $7.6 billion on the CFPB, but the Bureau returned $21 billion to consumers — about $2.76 for each dollar spent, said Mallory SoRelle, an assistant professor at Duke University’s Sanford School of Public Policy and the author of Democracy Declined: The Failed Politics of Consumer Financial Protection.

“But those numbers don’t account for the money that consumers save from the agency rulemaking, complaint handling, educational activities, or other supervisory activities, so it would be a conservative estimate," she said. "For example, the agency’s own estimates suggest that the 2024 overdraft rule alone could save consumers $5 billion each year — significantly increasing the return on investment from just one single rule. Even if the actual savings ended up being lower, that is a huge potential return.” 

“The agency has returned over $20 billion to consumers since its founding — protecting Americans from junk fees, medical debt, and predatory lending. President Trump campaigned on capping credit card interest rates at 10% and lowering costs for Americans. [Trump] needs a strong CFPB and a strong CFPB Director to do that. But if President Trump and Republicans decide to cower to Wall Street billionaires and destroy the agency, they will have a fight on their hands,” Sen. Elizabeth Warren (D-Mass.) said in a statement. Warren was one of the CFPB’s original champions.

Who’s looking out for consumers now?

SoRelle said that while there are agencies that have consumer divisions, their primary mission is to prioritize the profitability and soundness of financial institutions — such as the FDIC and the Federal Reserve — not the people they serve. The “low bar” of protections, in fact, helped usher in the financial crisis of 2008.

“There were these existing agencies, but they were adopting pretty weak consumer financial protections,” SoRelle said, “They weren't really as engaged with some of the enforcement actions that were needed to keep on top of those protections.”

Consumers can also wield power by choosing financial products, especially through credit unions, that are more consumer friendly. And read the fine print, carefully. “I don't think it's fair to say that all of these financial institutions are out to defraud people, but it's also true that there are a lot of financial institutions that have historically engaged in practices that break the law, that engaged in discriminatory practices or unfair practices, or are simply focused on profits and are charging fees that are disproportionately hard for certain types of people to pay for,” SoRelle said.

It's expensive to be poor. For many, the problem isn’t so much lack of financial knowledge as having poor credit and fewer options, falling into murderous interest rates and deeper debt via payday loans and overdraft fees.

What’s next?

Financial payment services are ramping up — especially peer-to-peer payments across social media and “buy now, pay later” services — without much regulation. “Nobody's really quite clear who has oversight over them,” SoRelle said. “We're not really sure if some of these products count as credit or if maybe there's something else.” Without the CFPB, new platforms and services may escape a regulatory eye.

Some states, however, may step in, depending on how seriously they take consumer protection, creating a patchwork of regulations across the country. “If you live in a state where the government is deciding to regulate these more stringently, you are going to have more protection,” SoRelle said.

“For now, the complaint database of the CFPB is still available and people should file complaints there. The CFPB historically has done a really good job of trying to help consumers navigate those complaints,” SoRelle said. She advised folks to also leverage their state’s attorney general’s office and any other consumer protection apparatus available.

SoRelle urged people to reach out to their elected officials to support the full restoration of the CFPB.

“If you value the work that the CFPB does, and you want your pocketbook protected, then you’ve got to show up for it the way that it would show up for you. And that means contacting your elected officials to tell them to stop what's happening,” she said.