What is the CFPB?

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In a Nutshell

The CFPB works to prevent unfair, deceptive and abusive practices from financial companies by taking action against those that break the law. The bureau also works to educate and empower consumers to make the best financial decisions for themselves.

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The Consumer Financial Protection Bureau fights for consumers and stands up to companies looking to take advantage of American consumers.

If you just hear the four-letter acronym, you may wonder … what is the CFPB? The Consumer Financial Protection Bureau is definitely something you should know about. Created in the wake of the Great Recession — the most severe financial crisis in the U.S. since the Great Depression — the CFPB came into existence with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010.

If you think you’ve been a victim of a financial scam, you can reach out and file a formal complaint with the CFPB. In response to illegal actions, the CFPB has generated $12.4 billion in relief for more than 31 million consumers.


What the CFPB is

The Consumer Financial Protection Bureau, often simply called the CFPB, is a U.S. government agency. Prior to the CFPB’s founding, responsibilities for consumer protections fell to seven government agencies. The CFPB consolidated those responsibilities under one director, appointed by the president of the United States.

The CFPB employs more than 1,500 people in six divisions: Consumer Education and Engagement; Supervision, Enforcement and Fair Lending; Research, Markets and Regulations; External Affairs; Legal; and Operations.

Its regular activities include protecting against unfair, deceptive or abusive acts, and efforts to enforce existing consumer financial protection laws. Through the complaint process and financial education, the CFPB does great work to protect Americans from bad actors in a broad range of sectors in the financial industry.

A brief history of the CFPB

The Obama administration pointed to weak and scattered financial-regulatory agencies as part of the cause of the Great Recession. In a speech promoting the CFPB, President Obama explained that regulators either didn’t have the authority or didn’t act to prevent the chain of events that led to a near economic collapse during the financial crisis of 2007 and 2008. Congress created the CFPB to fix those problems.

Sen. Elizabeth Warren of Massachusetts was charged with the task of launching the agency. And former Ohio Attorney General Richard Cordray became the bureau’s first director.

The CFPB is not without its detractors. Republicans and conservative groups have argued that the agency is an example of government overreach and that its powers should be limited. When President Trump took office, the CFPB landed in the headlines as the president and other Republicans made a concerted effort to minimize the bureau’s powers.

After a high-profile dispute over the top office at the CFPB, Trump appointed Mick Mulvaney, a well-known critic of the organization, as its acting director. Mulvaney continues in this role as of November 2018.

Why the CFPB is important

According to the CFPB, one in five Americans over 65 has reportedly fallen victim to a financial scam. While organizations ranging from local law enforcement to the AARP make efforts to combat these actions, it takes a broader effort to protect the entire American public from financial fraud and scams.

Banks and credit unions are overseen by a variety of federal agencies, including the FDIC, the NCUA and the Federal Reserve. The CFPB also watches banks and credit unions but covers other financial products and companies that fall outside the scope of those regulators as well. Credit cards, payday loans, online loans, mortgages and other financial products offer opportunities for fraud and unfair practices. Looking at the mortgage meltdown that led to the 2007–2008 financial crisis, it’s easy to see how unfair or deceptive financial practices can harm unsuspecting consumers and the economy at large.

Other important financial regulators remain in place. For example, the Securities and Exchange Commission focuses on the stock market and securities and the Federal Trade Commission works on anticompetitive, deceptive and unfair business practices.

From Wall Street to Main Street, the CFPB has an important role in keeping consumers like you safe from unfair practices in the financial industry.


Bottom line

The CFPB works to keep bad actors from harming consumers. It has put more than $12 billion back into the pockets of Americans who fell victim to financial scams or unfair practices. The CFPB website, at consumerfinance.gov, offers a plethora of resources to educate Americans with the information they need to make the best-informed financial decisions. It all comes together in a valuable package, with the CFPB making Americans’ lives better every day of the year.