Conventional wisdom is that under the Biden Administration, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) will pivot to a more muscular approach to enforcement of consumer financial protection laws. The current leadership has already begun to signal the CFPB’s move towards a more aggressive approach while President Biden’s nomination to lead the agency, FTC Commissioner Rohit Chopra, is considered by the Senate Committee on Banking, Housing, and Urban Affairs. CFPB Acting Director Dave Uejio has issued a number of statements identifying the agency’s priorities, particularly for the Bureau’s Division of Supervision, Enforcement & Fair Lending (“SEFL”), which are expected to continue—and potentially broaden—under a Chopra CFPB. The CFPB has already begun to rescind Trump administration policies restricting its enforcement more generally, and has indicated its intent to prioritize the enforcement of potential violations related to the COVID-19 pandemic and racial inequity.
This note provides a brief update on CFPB actions to date.
Reversing Trump-era Limitations to its Enforcement Authority
Early in his role, Acting Director Uejio stated his intention “to rescind public statements conveying a relaxed approach to enforcement of the laws in our care.” Under former Acting Director Mick Mulvaney, the CFPB brought significantly fewer enforcement actions overall and under former Director Kathy Kraninger, the Bureau shifted its enforcement focus to smaller companies, sought smaller fines, and collected less money than the Obama CFPB. Among other things, the Agency adopted a restrictive reading of the “abusive” acts and practices prong of the “unfair, deceptive, or abusive acts and practices” (“UDAAP”) provision of the Dodd-Frank Act, which culminated in a 2020 policy statement from the Kraninger CFPB asserting the Bureau (i) would not challenge allegedly abusive conduct unless the harm the conduct caused the consumer outweighed any benefit to the consumer; (ii) would only pursue “abusiveness” claims on a standalone basis (ending “dual-pleading”); and (iii) would not seek punitive monetary relief where the covered person made a “good faith” effort to avoid abusive conduct.
On March 11, the Biden CFPB reversed the previous policy statement, making clear its intention to engage in a full-throated use of the UDAAP provision in its supervisory and enforcement efforts. In rescinding the policy, Acting Director Uejio noted that it was “inconsistent” with the purpose of the CFPB and that there was no basis for portions of the policy, including the first requirement that any harm must outweigh the benefit to the consumer to constitute “abuse.” The Bureau did not issue further guidance clarifying the “abusive acts” prong, which has long been viewed as highly ambiguous by lenders seeking to comply with its vague proscriptions.
Acting Director Uejio similarly reversed another Trump administration policy in January when he announced that the Bureau would resume supervisory exams of lenders pursuant to the Military Lending Act, which had been suspended by the Mulvaney CFPB.
The COVID-19 Pandemic
The CFPB’s primary focus under the new administration thus far has been the response to the COVID-19 pandemic. Acting Director Uejio has discussed at length the Bureau’s findings about the impact of the COVID-19 pandemic on consumers. Since last May, the CFPB has been conducting high level inquiries into pandemic-related market conditions called “Prioritized Assessments.” In January, the Bureau’s Supervisory Highlights published a summary of these assessments, a number of which Acting Director Uejio expressed particular concern about including companies allegedly: providing incorrect or incomplete information to consumers, failing to properly process requests for forbearances or deferments, failing to follow forbearances or deferments that they had granted, misreporting accounts to credit bureaus, and “set[ting] off stimulus payments and unemployment insurance benefits in order to cover bank fees and other debts.” Though the Prioritized Assessments “were not designed to identify violations of Federal consumer financial law,” the Supervisory Highlights summary noted that these actions could be inconsistent with the CARES Act, the Fair Debt Collection Practices Act, state law, or other federal laws.
Additionally, Acting Director Uejio and the Prioritized Assessments highlighted potential racial disparities in administration of loans under the Paycheck Protection Program (“PPP”) as a result of many banks charged with originating PPP loans only accepting applications from existing customers. The CFPB noted that these policies may have disproportionately prevented minority-owned businesses from accessing PPP loans and could violate the Equal Credit Opportunity Act or Regulation B’s prohibitions on credit discrimination.
In response to these findings, Acting Director Uejio directed the Bureau’s Office of Supervision Examinations to further investigate those issues, “systemically remediate all of those who are harmed, and change policies, procedures, and practices to address the root causes of harms.” The Office of Enforcement will also expedite investigations while the COVID-19 pandemic is ongoing. Acting Director Uejio indicated that swift enforcement action is a priority “to ensure that industry gets the message that violations of law during this time of need will not be tolerated.”
The Bureau’s policy under the new administration has also shifted to focus on issues of racial inequity through the lens of consumer finance. As part of that effort, the Bureau has announced that a focus on fair lending enforcement is “a top priority.” This reflects a significant shift from the Trump era, in which the CFPB’s Office of Fair Lending was removed from the Bureau’s enforcement division, a move widely seen to signal a less enforcement-minded approach to fair lending issues. We have already seen the Bureau issue wide ranging requests for information to a variety of different types of consumer lending businesses. We expect an increase in fair lending enforcement, including with respect to PPP loan originators, as highlighted above.
Acting Director Uejio made clear, however, that stemming racial inequity is also a long-term issue and that he intends for the CFPB to “look more broadly, beyond fair lending, to identify and root out unlawful conduct that disproportionately impacts communities of color and other vulnerable populations.” Indeed, in its first enforcement lawsuit under Uejio, the CFPB sued Libre Services under an “abusiveness” theory for alleged conduct involving Spanish-speaking immigrants held in detention centers. Uejio noted that the case was “a prime example of how people of color are targeted in financial scams and the latent inequity that is too often found in the market for financial products and services.”
We expect a significant increase in enforcement and supervision activity from the CFPB. Current leadership has already begun to take action to strengthen the Office of Enforcement’s ability to investigate and enforce potential violations of consumer protection laws, starting with its near immediate reversal on UDAAP. The Bureau is likely to prioritize enforcement relating to COVID-19 and racial equity, bringing pandemic-related enforcement actions quickly to deter misconduct for the remainder of the COVID-19 pandemic and increasing enforcement of the Equal Credit Opportunity Act and Regulation B, which prohibit credit discrimination. However, we expect the CFPB will likely flex its enforcement muscles far beyond these subject matters under the direction of Commissioner Chopra, if he is confirmed. Lenders and financial institutions should consider the impact these broad interpretations of the consumer protection laws might have on their current policies and practices, particularly with respect to the disparate impact theories the CFPB seems keen to pursue.
 Dave Uejio, The Bureau is Taking Much-Needed Action to Protect Consumers, Particularly the Most Economically Vulnerable, CFPB Director’s Notebook (Jan. 28, 2021) https://www.consumerfinance.gov/about-us/blog/the-bureau-is-taking-much-needed-action-to-protect-consumers-particularly-the-most-economically-vulnerable/.
 Evan Weinberger, Enforcement Slowdown Defines Mulvaney’s CFPB Tenure, Bloomberg Law (Nov. 26, 2018), https://news.bloomberglaw.com/banking-law/enforcement-slowdown-defines-mulvaneys-cfpb-tenure-1.
 Evan Weinberger, CFPB Penalties Decline as Enforcement Actions Go Small, Bloomberg Law (Aug. 14, 2020), https://news.bloomberglaw.com/banking-law/cfpb-penalties-decline-as-enforcement-actions-go-small.
 Statement of Policy Regarding Prohibition on Abusive Acts or Practices, 85 Fed. Reg. 6733 (Feb. 6, 2020).
 Press Release, Consumer Financial Protection Bureau, Consumer Financial Protection Bureau Rescinds Abusiness Policy Statement to Better Protect Consumers (Mar. 11, 2021), https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-rescinds-abusiveness-policy-statement-to-better-protect-consumers/; Rescission of Statement of Policy Regarding Prohibition on Abusive Acts or Practices, 86 Fed. Reg. 14808 (Mar. 19, 2021).
 Glenn Thrush, Mulvaney Looks to Weaken Oversight of Military Lending, N.Y. Times (Aug. 10, 2018), https://www.nytimes.com/2018/08/10/us/politics/mulvaney-military-lending.html.
 Special Edition, COVID-19 Prioritized Assessments, 23 CFPB Supervisory Highlights 1 (2021), https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-23_2021-01.pdf.
 Yuka Hayashi, Mulvaney to Tell Lawmakers CFPB Will Keep Policing Lending-Discrimination Rules, Wall St. J. (Apr. 10, 2018), https://www.wsj.com/articles/mulvaney-to-tell-lawmakers-cfpb-will-keep-policing-lending-discrimination-rules-1523399093.
 CFPB v. Nexus Services, No. 5:21-cv-00016 (W. D. Va. Feb. 22, 2021).
 15 U.S.C. §§ 1691-1691f.
 12 C.F.R. pt. 1002.