What Is the Consumer Financial Protection Bureau?
The mission of the CFPB is to educate consumers so they can make informed financial choices and to help them successfully navigate the modern economic landscape. The CFPB also takes enforcement actions against corporations or institutions that violate the law or otherwise harm consumers.
The CFPB achieves this by doing the following:
- Enforcing federal consumer financial laws
- Supervising financial institutions
- Educating consumers about their rights and responsibilities
The CFPB operates independently within the Federal Reserve System. The Bureau is led by a single director, who is appointed by the President and confirmed by the Senate. This organizational structure lets the CFPB focus on protecting consumers’ rights and enforcing consumer protection laws while insulating it from political pressures.
History of the CFPB
The CFPB emerged as a response to the 2008 financial crisis. Its creation was driven by the need to address regulatory loopholes and protect consumers from unfair and abusive financial practices.
During the Great Recession in 2008, major financial institutions collapsed, the housing market crashed and there was a huge spike in unemployment. Millions of Americans lost their homes, jobs and savings.
In response, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law in July 2010. This landmark legislation resulted in the creation of the CFPB, which helped restore confidence in the financial marketplace.
What Does the CFPB Do?
The CFPB enforces many laws, including the following:
- Fair Credit Reporting Act
- Equal Credit Opportunity Act
- Truth in Lending Act
The CFPB’s role in enforcing consumer protection laws extends across banks, credit unions, mortgage-servicing operations and other financial companies. Some of the duties of the CFPB include the following:
- Supervising large financial institutions to assess their compliance with consumer protection laws
- Identifying potential risks to consumers
- Creating regulations to address violations
- Imposing fines
- Providing restitution to consumers who have been wronged
- Addressing complaints from consumers regarding unfair or deceptive financial practices
The CFPB’s Impact on Consumers
During the 2008 financial crisis, many homeowners faced foreclosure due to unfair practices by mortgage servicers. The CFPB established rules to prevent similar abuses in the future, including requirements for better communication with borrowers and procedures to address errors promptly. The bureau has taken enforcement actions against servicers for failing to follow these rules, leading to fines for servicers and relief for affected homeowners.
CFPB Lawsuit Against Navient
In 2017, the bureau took action against Navient, one of the largest student loan servicers in the United States. Navient was accused of persuading borrowers to enter into costly repayment plans, misallocating payments, providing incorrect information and other issues. As part of a 2022 settlement, Navient canceled the loan balances of about 66,000 customers – though the company continued to say the government’s claims were “unfounded.”
The CFPB’s Impact on Financial Institutions
As an independent federal agency, the CFPB holds significant sway over how banks, credit unions and lenders conduct business in the United States. The CFPB sets expectations for how financial institutions should run their operations to remain transparent and honest.
This influence extends to the following areas:
- Mortgage lending
- Credit card issuance
- Payday loans
Through its regulations, the CFPB has compelled financial institutions to offer clear and understandable disclosures, empowering consumers to make informed decisions and avoid hidden fees. Notable achievements of the CFPB include the following:
- Enhancement of transparency in financial transactions
- Enforcement of regulations to curb predatory lending
- Extension of financial relief to consumers harmed by unfair practices
Despite these achievements, the CFPB faces several challenges and criticisms. Critics have brought up the following concerns:
- Concerns that its regulatory efforts have created burdens for financial institutions, potentially restricting access to credit for some consumers
- Concerns regarding the bureau’s structure and funding mechanism
- Concerns about its level of autonomy and accountability
Striking the right balance between consumer protection and industry competitiveness remains a complex challenge for the CFPB as it continues to navigate the evolving financial landscape.
How To Use CFPB Resources
The CFPB offers a range of educational materials, including guides, videos and articles, designed to help consumers make informed financial decisions. Here’s a snapshot of the resources you can utilize on the CFPB’s website.
Educational Materials
The CFPB’s online educational resources cover an array of financial topics, including the following:
- Mortgages
- Credit cards
- Student loans
- Debt collection
- Homeownership
- Prepaid cards
- Disasters and emergencies
You can also explore informative videos on the CFPB’s website explaining complex financial concepts in an easy-to-understand format. These videos cover topics such as the following:
- Building credit
- Managing debt
- Avoiding scams
Whether you’re buying your first home, investigating how to pay for college or just looking to improve your financial literacy, the CFPB’s educational resources can empower you to make better financial decisions.
File a Complaint with the CFPB
If you believe you’ve been treated unfairly by a financial company, you can file a complaint with the CFPB online or by phone. To file a complaint online, visit the CFPB’s complaint portal.
When filing a complaint, you will need to provide the following:
- Clear and detailed information about the complaint
- Dates when the incident occurred
- Names of the people involved
- Any relevant documentation
This detail is crucial for the CFPB to understand the entire situation and take appropriate action. After submitting the complaint, you will receive a tracking number for future reference.
CFPB Complaint Status
Once you submit a complaint, you can track its progress online through the complaint portal or by phone. The CFPB will investigate your complaint and work with the company to resolve the issue. Possible resolutions include the following:
- Refunds
- Debt forgiveness
- Changes in company policies
FAQ: Consumer Finance Protection Bureau
The CFPB keeps a watchful eye on a wide range of financial institutions, including the following:
- Banks
- Credit unions
- Mortgage lenders and servicers
- Payday lenders
- Debt collectors
- Student loan servicers
You have two options to track your CFPB complaint:
- Online: Visit https://www.consumerfinance.gov/complaint/ and use your complaint reference number to check the status.
- Phone: Call the CFPB at (855) 411-CFPB (2372) and provide your information to a representative.
Not directly. You must dispute the error on your credit report with the credit reporting agency that has the information and/or the financial institution that provided the erroneous information. The CFPB offers educational materials to help you understand your credit report and dispute any errors.
Editor’s Note: Before making significant financial decisions, consider reviewing your options with someone you trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.
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