The CFPB is a government agency that aims to safeguard consumers from financial companies that engage in unfair, deceptive, or abusive practices.
The role of the CFPB is to inform people about various financial products and services and impose fines on financial firms that are found to have engaged in illegal activities.
The CFPB supervises institutions such as banks and credit unions that have assets over $10 billion. Additionally, they supervise nonbank mortgage originators and servicers, payday lenders, and private student lenders.
The CFPB takes action against banks for charging illegal overdraft fees and fines them for opening accounts without customer permission and failing to credit the full deposit amount to accounts. This relates to banking.
What is the CFPB?
The CFPB is a government agency that ensures the enforcement of consumer financial laws and acts as a watchdog for financial products.
According to the CFPB website, the agency fined financial companies found violating the law. The fines have resulted in billions of dollars being returned to affected consumers.
The CFPB has a team specifically dedicated to receiving consumer complaints about financial issues. They gather all the necessary information and work towards resolving the issue by directly contacting the company involved in the complaint.
History of the CFPB
In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act established the CFPB. The aim of this legislation, passed during the Obama administration, was to make the U.S. financial system safer for consumers and prevent acts that caused the financial crisis of 2007-2008.
The global crisis happened when the subprime mortgage lending market fell apart, causing the bubble to burst due to unsafe lending practices. The entities held accountable for the crisis include banks, investment banking firms, insurance companies, lenders, and credit rating agencies.
Before the establishment of the CFPB, consumer protection duties were divided among seven different federal agencies. The CFPB, headed by a director appointed by the U.S. president, consolidates all these responsibilities under one organization.
The director of the agency at present is Rohit Chopra. The agency comprises of different divisions such as Operations, Consumer Education & External Affairs, Legal, Supervision, Enforcement & Fair Lending, and Research, Monitoring & Regulations.
Banks fined by the CFPB
The CFPB fined multiple banks for imposing “illegal surprise overdraft fees.” This refers to the practice of charging overdraft fees to customers even when their account had enough funds at the time of the transaction.
- Wells Fargo: In 2022, Wells Fargo was fined $3.7 billion by the CFPB for mismanaging auto loans, mortgages, and deposit accounts, including a $205 million penalty for charging illegal surprise overdraft fees.
- Regions Bank: In 2022, the CFPB instructed Regions Bank to pay a sum of $191 million for imposing unauthorized overdraft charges without prior notice during the period from August 2018 to July 2021.
- TD Bank: The CFPB revealed in 2020 that TD Bank had to pay $122 million in fines and restitution for unlawfully charging overdraft fees for ATM and debit card transactions without proper authorization of customers’ affirmative consent in relation to the promotion and sale of an optional overdraft service.
How the CFPB can help you
Suppose you have been a victim of a financial scam or other unfair practices, and you have already contacted the company without receiving a satisfactory response. In that case, you can consider filing a complaint with the CFPB.
After submitting your complaint, the CFPB will send it to the concerned company, which is required to respond within 15 days as per the CFPB. The agency will also share your complaint information (without revealing your identity) in its consumer complaint database.
According to the CFPB, it sends over 10,000 complaints to companies weekly and redirects complaints to other agencies if it deems them better equipped to handle the issue.