Consumer Financial Protection Bureau (CFPB) Overview

What Is the Consumer Financial Protection Bureau (CFPB)?

The Consumer Financial Protection Bureau (CFPB) is a regulatory agency charged with overseeing financial products and services that are offered to consumers. The CFPB is divided into several units—Operations; Consumer Education & External Affairs; Legal; Supervision, Enforcement, and Fair Lending, and Research, Monitoring, and Regulations.

These units work together to protect and educate consumers about the various types of financial products and services that are available.

Understanding the Consumer Financial Protection Bureau (CFPB)

The Consumer Financial Protection Bureau (CFPB) was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

The CFPB is headed by a director who is appointed by the President for a five-year term. The bureau is also assisted by a Consumer Advisory Council, which is composed of at least six members who are recommended by regional Federal Reserve presidents.

Specifically, the CFPB helps consumer finance markets work more efficiently by providing rules, enforcing those rules, and empowering consumers to take control of their personal financial lives. The CFPB works to educate and inform consumers against abusive financial practices, supervise banks and other financial institutions, and study data to better understand consumers and the financial markets they participate in.

Supreme Court Decision

The Supreme Court of the United States (SCOTUS), in a 5-to-4 decision, ruled on June 29, 2020, that the structure of the CFPB violates the separation-of-powers clause of the constitution since the law directed that the CFPB director could be removed by the president only for "cause," defined as "inefficiency, neglect of duty, or malfeasance in office."

The Court determined that the president could remove the director of the CFPB for any reason. This decision allows the CFPB to remain intact but recognizes that the executive branch of the government is responsible for its direction.

How the CFPB Helps Consumers

The overall aim of the CFPB is to facilitate the development of the consumer finance marketplace. Through this, consumers have access to transparent financial prices and risks and become aware of deceptive and abusive financial practices. The CFPB breaks down this high-level aim into three very specific strategic goals.

1. The first goal is to empower consumers to live better economic lives by creating tools and answering questions to help consumers navigate their financial choices.
2. The second goal is enforcement; to take action against predatory companies and practices.
3. The third goal is education by publishing research and educating financial companies on their responsibilities to consumers.

In addition to these high-level goals, the CFPB also provides financial guidance for private individuals. Student financial guides are provided for parents and students who will have to pay for college. These guides allow people to compare financial aid available on the market.

For those who are far past college, the CFPB provides informational resources on retirement planning. The organization can help with Social Security benefits and provides tips specific to the retirement situation of the individual.

Finally, the CFPB can help private individuals with homeownership. The CFPB website provides consumers with interest rate information, monthly payment worksheets, and a loan comparison tool. For those consumers who need mortgage help, the CFPB provides advice on financial hardship.

Filing a Complaint With the CFPB

Part of the CFPB's mission to protect consumers includes a complaint system available to the public. These are the steps consumers can take.

1. The process begins when you file a complaint, which you can do through the CFPB or another agency. The CFPB process urges you to study the complaint process ahead of time to avoid misunderstanding about how the system works.
2. The CFPB forwards your complaint to the company you complained about and attempts to get a response from it. Sometimes another government agency is enlisted to help.
3. Within 15 days (60, on rare occasions) the company is expected to report back on any steps taken (or planned) to address the issue(s) in your complaint. This may include communication with you by the company as required.
4. Your complaint is published in the CFPB Consumer Complaint Database along with a description of what happened after the complaint was filed. Your personal information is removed before publication.
5. The CFPB will let you know when the company responds, let you review that response, and give you 60 days to provide feedback.

According to the CFPB, consumer complaints, which end up in the Consumer Complaint Database, help the agency "understand the financial marketplace and protect consumers."

The Bottom Line

The Consumer Financial Protection Bureau (CFPB) safeguards consumers by enforcing regulations on financial products and companies, ensuring that consumers don't fall prey to unscrupulous practices by companies and other economic participants.