Rule2025-08641
Authority of States To Enforce the Consumer Financial Protection Act of 2010; Rescission
Primary source
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Published
May 15, 2025
Effective
May 15, 2025
Issuing agencies
Consumer Financial Protection Bureau
Abstract
The Consumer Financial Protection Bureau (Bureau or CFPB) is rescinding its May 2022 interpretive rule regarding the scope of State enforcement under section 1042 of the Consumer Financial Protection Act of 2010 (CFPA) and related provisions.
Full Text
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<title>Federal Register, Volume 90 Issue 93 (Thursday, May 15, 2025)</title>
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[Federal Register Volume 90, Number 93 (Thursday, May 15, 2025)]
[Rules and Regulations]
[Pages 20565-20567]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-08641]
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CONSUMER FINANCIAL PROTECTION BUREAU
12 CFR Chapter X
Authority of States To Enforce the Consumer Financial Protection
Act of 2010; Rescission
AGENCY: Consumer Financial Protection Bureau.
ACTION: Interpretive rule.
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SUMMARY: The Consumer Financial Protection Bureau (Bureau or CFPB) is
rescinding its May 2022 interpretive rule regarding the scope of State
enforcement under section 1042 of the Consumer Financial Protection Act
of 2010 (CFPA) and related provisions.
DATES: As of May 15, 2025, the interpretive rule published at 87 FR
31940 (May 26, 2022) is withdrawn. This interpretive rule is effective
on May 15, 2025.
FOR FURTHER INFORMATION CONTACT: George Karithanom, Regulatory
Implementation and Guidance Program Analyst, Office of Regulations, at
202-435-7700. If you require this document in an alternative electronic
format, please contact <a href="/cdn-cgi/l/email-protection#e4a7a2b4a6bba587878197978d86888d909da487829486ca838b92"><span class="__cf_email__" data-cfemail="a6e5e0f6e4f9e7c5c5c3d5d5cfc4cacfd2dfe6c5c0d6c488c1c9d0">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
Pursuant to the CFPA, the Bureau is the Federal Government's
primary regulator of consumer financial products and services. However,
the CFPA recognizes that the States continue to play a significant and
important role in overseeing the consumer financial marketplace. See 12
U.S.C. 5552. On May 26, 2022, the Bureau issued an interpretive rule,
see 87 FR 31940, ``to provide further clarity regarding the scope of
State enforcement action under section 1042 and related provisions of
the CFPA.'' Specifically, the Bureau clarified that: (1) section 1042
``allows states to enforce any provision of the CFPA, including section
1036(a)(1)(A)''; (2) ``the limitations on the Bureau's authority in
sections 1027 and 1029'' of the CFPA ``do not constrain States'
enforcement authority under section 1042''; and (3) ``section 1042 does
not restrict States
[[Page 20566]]
from bringing concurrent enforcement actions with the Bureau.'' These
interpretations were improper. The Bureau is accordingly issuing this
interpretive rule to rescind the May 26, 2022, interpretive rule,
``Authority of States to Enforce the Consumer Financial Protection Act
of 2010,'' 87 FR 31940.
II. Analysis
A. Restoring Statutory Limits to States' Authority Under Section 1042
Section 1042 of the CFPA generally authorizes the States to ``bring
a civil action or other appropriate proceeding to enforce the
provisions of this title or regulations issued under this title . . .''
12 U.S.C. 5552(a) (emphasis added); see id. (authorizing State
attorneys general to ``enforce provisions of this title . . .''). The
``title'' referenced is title X of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, also called the CFPA. State authority
under section 1042 is therefore limited to actions to enforce the CFPA.
In the May 26, 2022, interpretive rule, the Bureau ignored this
limitation and interpreted section 1042 to allow States to bring an
action whenever ``a covered person or service provider violates any of
the Federal consumer financial laws,'' not just the CFPA. Were this the
case, however, the authorization under section 1042--that States may
enforce this title and regulations promulgated pursuant thereto--would
be surplusage. The Bureau believes a more appropriate interpretation of
section 1042 is that it permits States, subject to the limitations
imposed thereby, to enforce title X of Dodd-Frank (i.e., the CFPA) and
the regulations issued pursuant thereto. If Congress had intended the
CFPA to permit States to enforce any provision of any Federal consumer
financial law, it would have said so explicitly.
The Bureau emphasizes that, in rescinding the May 26, 2022,
interpretive rule related to States' authority under the CFPA, it is
not altering, limiting, or affecting the authority of States to take
any action authorized by any separate provision of State or Federal
law.
B. Preserving Limits on CFPA Enforcement Authorities
The interpretive rule also claimed that States' enforcement
authority under section 1042 is not subject to the limits on the CFPB's
enforcement authority under sections 1027 and 1029 of the CFPA. Under
those sections, the CFPB is subject to limits on its enforcement
authority with respect to certain entities (e.g., merchants and motor
vehicle dealers). 12 U.S.C. 5517, 5519. The limits under sections 1027
and 1029 are generally directed to ``the Bureau'' or ``the Bureau's
``Director.'' The interpretive rule concluded that because Congress
applied these limitations only to the Bureau, they do not extend to
States exercising their enforcement authority under section 1042.
This is not the best interpretation of the CFPA. ``[A] statute is
to be read as a whole, since the meaning of statutory language, plain
or not, depends on context.'' King v. St. Vincent's Hosp., 502 U.S.
215, 221 (1991). Sections 1027 and 1029 clearly limit the CFPB's
enforcement authority over certain entities. Although section 1042 does
not specifically address whether States are also subject to those
limits, section 1042 authorizes States to enforce and seek remedies
under the provisions of the CFPA. Because sections 1027 and 1029
establish important limits on how the CFPA can be enforced, section
1042 should be read consistently with those limits. Had Congress
intended for State enforcement authority under section 1042 not to be
subject to these limits (even though the Bureau is subject to those
limits), it would have said so explicitly.\1\
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\1\ The May 26, 2022, interpretive rule made much of the fact
that one of the exceptions in section 1027 applies expressly to
States. See 12 U.S.C. 5517(a)(2)(E) (``To the extent that the Bureau
may not exercise authority under this subsection with respect to a
merchant, retailer, or seller of nonfinancial goods or services, no
action by a State attorney general or State regulator with respect
to a claim made under this titlemay be brought under [section 1042],
with respect to an activity described in any of clauses (i) through
(iii) of subparagraph (A) by such merchant, retailer, or seller of
nonfinancial goods or services.''). According to the interpretive
rule, because Congress did not similarly extend the other exceptions
in sections 1027 and 1029 to States, those remaining limits do not
apply to States. That was a strained reading of the CFPA. As noted
above, the most natural reading of the entire statute is that the
section 1027 and 1029 limits do apply to States. To be sure, there
may be some redundancy introduced by section 1027(a)(2)(E), but
``[r]edundancies across statutes are not unusual events in drafting.
Connecticut Nat. Bank v. Germain, 503 U.S. 249, 253 (1992).
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Indeed, the enforcement scheme that Congress carefully crafted in
section 1042 would make little sense if States were not subject to the
limits in section 1027 and 1029. Before a State can bring an
enforcement action under section 1042, it must notify the CFPB, which
may intervene in the action as a party, be heard on all matters arising
in the action, and appeal any order or judgment in the proceeding. 12
U.S.C. 5552(b). However, if a State were to bring an enforcement action
against an entity over which the CFPB lacks enforcement authority under
sections 1027 and 1029, the CFPB would not be able to intervene in the
action under section 1042.
Because the most natural reading of the CFPA is that the limits in
sections 1027 and 1029 apply to State enforcement under section 1042,
the CFPB rescinds the portion of the May 26, 2022, interpretive rule
that took the contrary (and incorrect) position.
C. Aligning State Action With Statutory Limitations
The Bureau is also rescinding its prior interpretation of section
1042 insofar as it permitted States to ``bring (or continue to pursue)
actions under section 1042 even if the Bureau is pursuing a concurrent
action against the same entity.''
It is the policy of the Bureau to reduce regulatory and compliance
burdens, and to eliminate wasteful, duplicative, and unnecessary
regulatory and enforcement activity. Interpreting section 1042 to
permit States and the Bureau to take parallel enforcement actions
against the ``same entity'' is out of step with this policy.
Further, this interpretation from the May 26, 2022, interpretive
rule is not compelled by section 1042. Section 1042(b) contemplates
joint, rather than concurrent, actions by States and the Bureau.
Indeed, that subsection requires States to notify the Bureau of
``administrative or regulatory proceedings'' taken pursuant to section
1042 and provides that--upon notification of a State action--the Bureau
may ``intervene in the action as a party.'' 12 U.S.C. 5552(b)(1). The
Bureau accordingly believes its previous interpretation of section
1042--that States ``may bring (or continue to pursue) actions under
section 1042 even if the Bureau is pursuing a concurrent action against
the same entity''--is improper. The notification and intervention
provisions of the CFPA contemplate joint, not parallel, State and
Bureau actions.
This rescission does not affect States' ability to undertake
independent enforcement or regulatory action when the Bureau has not
initiated its own action against an entity.
III. Regulatory Matters
This is an interpretive rule issued under the Bureau's authority to
interpret the CFPA, including under section 1022(b)(1) of the CFPA,
which authorizes guidance as may be necessary or appropriate to enable
the Bureau to administer and carry out the purposes and objectives of
Federal consumer financial laws, such as the CFPA.
[[Page 20567]]
As an interpretive rule, this rule is exempt from the notice-and-
comment rulemaking requirements of the Administrative Procedure Act
pursuant to 5 U.S.C. 553(b)(4)(A). Because no notice of proposed
rulemaking is required, the Regulatory Flexibility Act, see 5 U.S.C.
603, does not require an initial or final regulatory flexibility
analysis. The Bureau has also determined that this interpretive rule
does not impose any new or revise any existing recordkeeping,
reporting, or disclosure requirements on covered entities or members of
the public that would be collections of information requiring approval
by the Office of Management and Budget under the Paperwork Reduction
Act.
Russell Vought,
Acting Director, Consumer Financial Protection Bureau.
[FR Doc. 2025-08641 Filed 5-14-25; 8:45 am]
BILLING CODE 4810-AM-P
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