Potential for Increased State Consumer Finance Enforcement

A decrease in Consumer Financial Protection Bureau (“CFPB”) enforcement actions may motivate state regulators to fill the enforcement void. We have not seen a dramatic increase in state actions to date, but it will necessarily take states time to hire staff and initiate investigations that will ultimately lead to public settlements. Notably, there have been reports of former CFPB staff joining various state regulator and attorney general offices.

While states have their own consumer financial laws that they enforce, including UDAP/UDAAP prohibitions, they could also enforce certain federal consumer financial laws. With some limitations on actions against national banks or federal savings associations, Section 1042 of the Dodd-Frank Act provides that state attorneys general may bring a civil action to enforce Title X of the Dodd-Frank Act or regulations issued under Title X of the Dodd-Frank Act.¹ Similarly, Section 1042 provides that a state regulator may bring a civil action or other appropriate proceeding to enforce the provisions of Title X of the Dodd-Frank Act or regulations issued under Title X of the Dodd-Frank Act with respect to any entity that is state-chartered, incorporated, licensed, or otherwise authorized to do business under state law.² With respect to a national bank or federal savings association, Section 1042 provides that state attorneys general may bring an action to enforce a regulation prescribed by the Bureau under Title X of the Dodd-Frank Act.³

Enforcing Title X of the Dodd-Frank Act could include enforcing the Act’s UDAAP prohibition. Whether states have the authority under the Dodd-Frank Act to enforce the 18 enumerated federal consumer financial laws—such as the Truth in Lending Act and the Fair Credit Reporting Act, and their implementing regulations—is a trickier question.

In 2022, the CFPB published an interpretive rule taking the position that, because Title X declares that it is unlawful for a covered person or service provider to offer or provide any consumer a financial product or service that is not in conformity with the 18 enumerated federal consumer financial laws, states have the authority to bring an action under the Dodd-Frank Act for violations by a covered person or service provider of any of the enumerated consumer financial laws.⁴ A federal court has agreed with this view.⁵ The current Bureau has taken a different view. In May 2025, the CFPB rescinded its previously issued interpretive rule and took the position that Congress did not intend to permit states to enforce “any provision of any [f]ederal consumer financial law.”⁶

Section 1042 of the Dodd-Frank Act provides that state attorneys general or state regulators must provide notice to the Bureau when initiating an action to enforce Title X of the Dodd-Frank Act or regulations issued under Title X of the Dodd-Frank Act. In response, the CFPB may intervene in the state action as a party to prevent state enforcement. The Bureau can remove the action to an appropriate US district court, be heard on all matters arising in the action, and appeal orders or judgments.⁷

In addition to authority under the Dodd-Frank Act, certain federal consumer financial laws expressly provide state enforcement authority. States, for example, may bring suit under the Fair Credit Reporting Act.⁸

Given the potential for increased state scrutiny, regulated entities should ensure they maintain robust compliance management programs covering both state and federal obligations.

¹ 12 U.S.C. § 5552(a).

² Id.

³ Id.

⁴ CFPB, “Authority of States to Enforce the Consumer Financial Protection Act of 2010,” 87 Fed. Reg. 31940, 31941 (May 26, 2022).

⁵ Pennsylvania by Shapiro v. Mariner Fin., LLC, No. CV 22-3253, 2024 WL 169654, at *13 (E.D. Pa. Jan. 12, 2024) (holding that a state could bring an action under Section 1042 to enforce the Truth in Lending Act, one of the enumerated consumer financial laws).

⁶ CFPB, “Authority of States to Enforce the Consumer Financial Protection Act of 2010; Rescission,” 90 Fed. Reg. 20565 (May 15, 2025).

⁷ 12 U.S.C. § 5552(b).

⁸ 15 U.S.C. § 1681s(c).