Analysis
Comparison of CFPB and FTC Authorities
With the anticipated “streamlining” of the Consumer Financial Protection Bureau’s (CFPB) jurisdiction and authority, it is possible that the Federal Trade Commission (FTC) may assume an enhanced role in overseeing the activities of financial services providers. To appreciate the FTC’s role, the attached chart compares the powers and authorities of the FTC and the CFPB. The key takeaways from the chart are:
- The Agencies’ Missions Overlap: The CFPB implements and enforces federal consumer financial law for the purpose of ensuring that all consumers have access to markets for consumer financial products and services and that those markets are fair, transparent, and competitive. The FTC prevents business practices that are anticompetitive, deceptive, or unfair to consumers and enhances informed consumer choice and public understanding of the competitive process.
- FTC Has Jurisdiction over Nonbanks: The FTC has no jurisdiction over banks and the business of insurance but can investigate violations of and enforce federal consumer financial laws (e.g., TILA, EFTA) and UDAAP for fintechs and other nonbanks. Thus, while CFPB’s oversight of nonbanks engaged in consumer financial activities may reduce, the FTC may continue to oversee nonbanks engaged in financial activities.
- The FTC Relies Upon Investigation and Enforcement Powers, Not Examinations: The FTC’s supervisory powers are limited to investigations and enforcement actions. The agency is not authorized to engage in regular examinations of financial or non-financial firms. CFPB has the authority to examine banks, credit unions, and their affiliates with total assets of more than $10 billion and certain nonbanks (e.g., mortgage originators, payday lenders, and larger participants in specified markets). While CFPB’s examinations of large banks may be affected by the announced “streamlining,” the federal banking agencies retain authority to enforce all federal laws and may deem the violation of a federal consumer financial protection law to be an unsafe and unsound practice.
- FTC and CFPB’s Enforcement Powers Against Nonbanks Overlap, and The Agencies Coordinate Enforcement: The agencies’ enforcement powers overlap for nonbanks – each agency has enforcement authority with respect to nonbanks for violations of enumerated consumer financial laws and UDAAP (CFPB) or UDAP (FTC). In addition, CFPB can enforce an FTC UDAP rule, and FTC can enforce a CFPB UDAAP rule. The CFPB and FTC are required to coordinate when taking enforcement actions, and there are several examples of instances in which the two agencies have coordinated enforcement actions.
- The FTC’s Authority to Write Regulations is Limited: The FTC is authorized to write regulations only for UDAP and the Telemarketing and Consumer Fraud and Abuse Prevention Act. CFPB retains exclusive authority to write rules implementing all other federal consumer protection laws, including TILA, RESPA, EFTA, FCRA (with minor exceptions), and UDAAP. In writing rules, CFPB is required to consult with other agencies, including the FTC. As a practical matter, the CFPB has followed FTC precedents in applying the unfair and deceptive prongs of UDAAP. Given CFPB’s continuing authority over rule-writing, financial firms interested in changing existing regulations implementing federal consumer protection laws must look to the CFPB for relief, not the FTC.
- The FTC Maintains its Own Consumer Complaint Portal: Both the FTC and the CFPB operate a consumer complaint function, and they share consumer complaint information with each other.
- And, Let's Not Forget State AGs: While the CFPB may be less active, and it is unclear how active the FTC may be, we should not forget that State Attorneys General retain investigative and enforcement powers over banks and nonbanks, and some State AGs may decide to fill any gap created by reduced federal oversight. Thus, both banks and nonbanks need to continue to focus on compliance with federal financial consumer protection laws, including UDAP/UDAAP. Additionally, some enumerated consumer financial protection laws include a private right of action.
| CFPB | FTC | Coordination/Comment | |
|---|---|---|---|
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Establishment |
The Consumer Financial Protection Bureau (CFPB) was established by the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. § 5481 et seq. |
The Federal Trade Commission (FTC) was established by the Federal Trade Commission Act (FTC Act), 15 U.S.C. § 41 et seq. |
In 2012 (and reauthorized in 2015 and 2019), the CFPB and FTC entered into a Memorandum of Understanding (MOU) based upon provisions in the CFPA that require the two agencies to coordinate investigations, enforcement and rulemaking activities. |
|
Mission |
The CFPB is authorized to implement and enforce federal consumer financial law for the purpose of ensuring that all consumers have access to markets for consumer financial products and services and that the markets for consumer financial products and services are fair, transparent, and competitive. |
The FTC is authorized to prevent business practices that are anticompetitive, deceptive, or unfair to consumers, and to enhance informed consumer choice and public understanding of the competitive process. |
For a more detailed description of each agency’s mission, see section I of the MOU. |
|
The Scope of Authority |
The CFPB has rule-writing authority for enumerated federal consumer financial laws and for unfair, deceptive, or abusive acts or practices (UDAAP); supervision authority over certain banks and nonbanks; and broad enforcement authority for supervised entities, and for certain non-supervised entities. The CFPB does not have authority over:
See 12 U.S.C. §§ 5517 and 5519. |
The FTC has rule-writing authority with respect to non-banks under the Telemarketing and Consumer Fraud and Abuse Prevention Act (TCFAP) and for unfair and deceptive acts or practices (UDAP); and enforcement authority over non-banks. The FTC does not have authority over:
The FTC also does not have authority over the business of insurance to the extent that such business is regulated by state law. See 15 U.S.C. §§ 45(a)(2) and 57a(f) (unfair or deceptive acts or practices); 15 U.S.C. § 6105 (TCFAP); and 15 U.S.C. §1012 and FTC Opinion 03-1 (insurance). |
In summary: The CFPB has regulatory, supervisory (i.e., examination) and enforcement authority over firms that engage in consumer financial services activities (broadly defined) and service providers for such firms. The FTC has rule-writing authority for UDAP and TCFAP and enforcement authority over nonbanks. Note: The federal banking agencies also have authority to enforce violations of UDAP by banking institutions. |
|
Rule-writing & Guidance |
The CFPA gave CFPB exclusive rulemaking authority over enumerated federal consumer financial laws, which are listed in that Act as follows:
The CFPB also may write rules with respect to UDAAP. See 12 U.S.C. §§ 5481(12) and 5531. |
The FTC has exclusive rulemaking authority for UDAP and the TCFAP. The FTC also retained authority to write rules with respect to motor vehicle dealers. |
Consultation Generally. The CFPA requires the CFPB to “consult with the appropriate prudential regulators or other Federal agencies prior to proposing a rule and during the comment process regarding consistency with prudential, market, or systemic objectives administered by such agencies” and to include a description of any written objections to such rules in an adopting release. See 12 U.S.C. § 5512. Section V.A.4. of the CFPB-FTC MOU provides that the two agencies meet no less than twice annually to discuss additions or subtractions to the Unified Agenda of Regulatory and Deregulatory Actions that relate to rulemakings. Telemarketing. The CFPA (Section 1100C) requires the FTC to consult with the CFPB if a rule implementing the TCFAP applies to a person regulated by the CFPB. See also: Section V.A.2. of the MOU. UDAP/UDAAP. The MOU requires CFPB and the FTC to notify the other agency that it intends to issue proposed or final rules related to UDAP or UDAAP (Section V.B.2. of the MOU). The MOU also requires the FTC and CFPB to confer at least annually, and provide 30 days’ advance notice, with respect to UDAAP/UDAP guidance. (Section VI of the MOU). Additionally, for UDAAP rules, the CFPA requires CFPB to consult with the federal banking agencies and other agencies on the consistency of the proposed rule with prudential, market, or systemic objectives administered by such agencies (12 U.S.C. § 5531). As a practical matter, the CFPB has followed FTC precedents in applying the unfair and deceptive prongs of UDAAP. In 2023, CFPB issued a policy statement on abusive acts or practices. Other Statutes. The MOU provides that the CFPB and FTC will notify the other agency in advance of writing rules related to: section 626 of the Omnibus Appropriations Act, 2009; the Fair Debt Collection Practices Act; the Fair Credit Reporting Act; and the Telemarketing and Consumer Fraud and Abuse Prevention Act. (Sections V.A.3 and V.A.4 of the MOU). |
|
Supervision |
Banks. CFPB has the authority to examine banks, credit unions, and their affiliates with total assets of more than $10 billion, and backup authority over banks and credit unions with total assets of $10 billion or less. 12 U.S.C. §§ 5515, 5516. Nonbanks. CFPB has supervision authority over nonbanks that are:
Service Providers. The CFPB also has supervisory authority over service providers of the covered persons it supervises. 12 U.S.C. §§ 5514(a), 5514(c). |
The FTC does not have examination authority. |
Under the MOU, CFPB has agreed to provide the FTC with exam schedules for nonbanks and to share examination and other confidential information upon FTC written request. (Section VII of the MOU) |
|
Enforcement |
The CFPB has enforcement authority with respect to enumerated Federal consumer financial laws and UDAAP over:
See 12 U.S.C. §§ 5514, 5561-64. The CFPB may enforce a rule prescribed by the FTC with respect to an unfair or deceptive act or practice to the extent that such rule applies to a covered person or service provider with respect to the offering or provision of a consumer financial product or service as if it were a rule prescribed under CFPB’s UDAAP authority. 12 U.S.C. § 5581(b)(5)(B)(ii). |
The FTC has authority to take enforcement actions with respect to non-banks, including affiliates of banks, for violations of enumerated federal consumer financial laws, UDAP, and the TCFAP. 15 U.S.C. § 45; 12 U.S.C. § 5514(c); and e.g., 15 U.S.C. § 1607(c). The FTC may enforce a rule prescribed by the CFPB under the CFPA (e.g., a UDAAP rule) with respect to a covered person subject to the jurisdiction of the FTC, as if it were a violation of such a rule issued under 15 U.S.C. § 57a with respect to a UDAP. 12 U.S.C. § 5581(b)(5)(C)(ii) FTC has no authority to initiate enforcement actions over banks. |
The CFPA requires the CFPB and FTC to coordinate when taking enforcement actions (See 12 U.S.C. § 5514(c)). Accordingly, the MOU provides that each agency provides prior notice before:
There are several instances in which the two agencies have coordinated enforcement actions. |
|
Consumer Complaints |
Pursuant to a directive in the CFPA, the CFPB established a consumer complaint function, and coordinates with the appropriate regulators, including the FTC, to route complaints to them. See 12 U.S.C. § 5493(b)(3) |
FTC accepts and shares consumer complaints via its Consumer Sentinel Network. |
CFPB shares consumer complaint information with the FTC’s Consumer Sentinel Network so that such information will be made available to all other law enforcement organizations that use Sentinel. Conversely, the FTC makes consumer complaint information available to the CFPB through the Consumer Sentinel Network. See section IX of the MOU. |