What to Watch for as CFPB Stops Rulemaking in Its Tracks

To say it’s been an eventful week for the Consumer Financial Protection Bureau might be an understatement.

Last weekend, President Donald Trump fired CFPB Director Rohit Chopra, and then on Monday (Feb. 3) came the news that Treasury Secretary Scott Bessent would take the helm as acting director.

The same day, Bessent ordered a pause to all CFPB-related activities via an internal communication to the agency’s staff. The order is sweeping, as all manner of activities — from enforcement actions to litigation — are covered. So is rulemaking, as the agency is now prohibited from issuing rules or even guidance. Final rules? The ones that are not yet in effect are now not taking effect.

There’s also a chance that the Congressional Review Act will be used to revisit and perhaps rescind rules that were already put into full force by the CFPB. The act has a lookback component that lets lawmakers review rules that were put in place during the previous congressional session over a period of a few months. The litigation that is moving across various courts is also being effectively frozen, as the CFPB contacted the courts to request a pause.

As a result, there may be considerable changes or wholesale elimination of rules tied to open banking, overdraft fees and the reporting of medical debt on credit reports.

In terms of the mechanics of the pause, and as part of a broader order by Trump issued on his first day in office, all agencies, including the CFPB, must refrain from sending rules to the Federal Register.

As to what is affected in the world of payments, there is some measure of uncertainty as to what is changing, what will stay the same and whether the rules may take effect at all.

Medical Debt and Overdraft Rules

Last month, the CFPB’s final rule would remove $49 billion in medical debt from more than 15 million Americans’ credit reports. That “class” of debt (that’s our term) would no longer appear on credit reports.

Separately, the CFPB in December issued a rule reshaping overdraft fees levied by financial institutions. Institutions must choose one of three options for their overdraft programs: cap overdraft fees at $5; set fees to cover only costs and losses; or comply with standard lending laws, including interest rate disclosures.

Data Brokers

In a December notice of proposed rulemaking, the CFPB sought to define data brokers as consumer reporting agencies. As such, they would be subject to the rules of the Fair Credit Reporting Act. Under that designation, there would be restrictions on how and when data brokers would be able to collect and use the data they collect — and they would have to demonstrate “permissible purpose” as they do so.

Big Tech’s Digital Payment Ambitions

In November, a finalized rule from the CFPB expanded oversight of payments to treat firms — the Big Tech names behind Google Pay, Apple Wallet, Venmo and a broad range of apps — as banks.

The companies would have undergone proactive examinations, wherein “CFPB examiners may ask to see a company’s existing compliance policies and procedures, otherwise review a company’s records and operations including for selected customer accounts, conduct interviews with personnel, and assess how the company complies with applicable federal consumer financial laws. The scope of an examination will depend on, among other factors, the size and complexity of the firm.”

As of last month — before the new administration took office — the CFPB had requested further input on the use of personal data within financial services.

BNPL

Although the next regulation falls outside of the lookback period as it was issued in May, the CFPB released an interpretive rule classifying buy now, pay later (BNPL) firms that provide pay-in-four options as credit providers. As part of the rule, BNPL providers must investigate disputes initiated by consumers, pause payment requirements during the investigation, and provide periodic billing statements like those provided by credit card companies.