CFPB Continues Efforts to Rescind Multiple Biden-Era Rules
The CFPB has withdrawn its 1) Fair Credit Reporting Act (FCRA)/Regulation V Proposed Rule (Data Broker Rule), 2) Prohibited Terms and Conditions in Agreements for Consumer Financial Products or Services (Regulation AA) Proposed Rule and 3) proposed interpretive rule concerning Electronic Fund Transfers Through Accounts Established Primarily for Personal, Family, or Household Purposes Using Emerging Payment Mechanisms. In addition, the CFPB has rescinded its May 2022 interpretive rule regarding the scope of state enforcement under Section 1042 of the Consumer Financial Protection Act of 2010 (CFPA) and related provisions. These notices were published in the Federal Register on May 15, 2025.
Data Broker Proposed Rule
The Data Broker Rule, which Holland & Knight previously reported on, would have implemented certain FCRA definitions of "consumer report" and "consumer reporting agency," as well as certain of the FCRA's provisions governing when consumer reporting agencies may furnish, and users may obtain, consumer reports. The CFPB, however, "has determined that legislative rulemaking is not necessary or appropriate at this time to address the subject matter of the [proposed rule]" in light of updates to agency policies and that it "will not take any further action on the [proposed rule]." The CFPB states that "[a]lthough the proposed rule intended to implement portions of the FCRA, in many respects it did so in a manner not aligned with the Bureau's current interpretation of the FCRA, which it is in the process of revising, and its changed policy objectives."
In addition, the CFPB highlights how commenters "raised numerous concerns related to this proposed rule that the Bureau believes require careful consideration before proceeding with a final rule. At least one commenter raised concerns related to the proposed rule's propriety under the plain text of the FCRA, and there were similar questions as to the Bureau's statutory authority to issue many of the proposals." The future of the subject matter of this rulemaking remains in flux, as the CFPB notes that "[w]hen and if the Bureau determines it necessary to issue a rule implementing the relevant definitions and provisions of the FCRA, it will propose a new rule and seek public comment thereon." The proposed rule is withdrawn as of the May 15, 2025, date of publication in the Federal Register.
Regulation AA Proposed Rule
With respect to the Prohibited Terms and Conditions in Agreements for Consumer Financial Products or Services (Regulation AA) Proposed Rule, which would have prohibited certain contractual provisions in agreements for consumer financial products or services, the CFPB also has determined that "legislative rulemaking is not necessary or appropriate at this time to address the subject matter of the [proposed rule]" and that it "will not take any further action on the [proposed rule]."
The CFPB states that it is withdrawing the proposed rule "in light of changes in and updates to its policies, agenda, and objectives." The agency "is re-evaluating the need for this proposed rule's prohibition on the use of certain contractual provisions that limit expression or purport to waive substantive consumer legal rights and protections, or their remedies, under State or Federal law." In particular, the CFPB is concerned that this proposed rule "is largely duplicative of the Federal Trade Commission's Credit Practices Rule." The CFPB also states that it received comments warranting withdrawal and further consideration of the merits of the proposed rule, including arguments that the agency lacks authority to adopt the proposed rule. The proposed rule is withdrawn as of the May 15, 2025, date of publication in the Federal Register.
Regulation E/Electronic Fund Transfers Proposed Interpretive Rule
The CFPB's proposed interpretive rule titled "Electronic Fund Transfers Through Accounts Established Primarily for Personal, Family, or Household Purposes Using Emerging Payment Mechanisms," which Holland & Knight previously reported on, was intended to assist companies, investors and other market participants evaluating existing statutory and regulatory requirements governing electronic fund transfers (EFTs). The CFPB states that it is withdrawing this proposed interpretive rule "because further rulemaking action with respect to this proposal does not align with current agency needs, priorities, or objectives," and that the agency "is continuing to evaluate the need for guidance related to the legal requirements associated with EFTs and will take further action if deemed necessary."
The CFPB also is concerned by how the comments received on this proposed interpretive rule "raise multiple issues warranting further attention related to, for example, whether the proposed interpretive rule properly interprets the EFTA." Should the CFPB decide that an interpretive rule related to the legal requirements associated with EFTs is necessary in the future, the agency "believes such proposal would benefit from an additional comment period on any proposals accounting for the issues raised by commenters." The proposed rule is withdrawn as of the May 15, 2025, date of publication in the Federal Register.
State Enforcement Authority Interpretive Rule
Finally, the CFPB has issued a new interpretive rule to rescind its May 2022 interpretive rule regarding the scope of state enforcement under Section 1042 of the CFPB and related provisions. The CFPB states that the interpretations in the May 2022 interpretive rule "were improper." In particular, current CFPB leadership believes that "a more appropriate interpretation of section 1042 is that it permits States, subject to the limitations imposed thereby, to enforce title X of Dodd-Frank (i.e., the CFPA) and the regulations issued pursuant thereto. If Congress had intended the CFPA to permit States to enforce any provision of any Federal consumer financial law, it would have said so explicitly."
The CFPB also believes that states' enforcement authority under Section 1042 is subject to the same limits on the CFPB's enforcement authority under Sections 1027 and 1029 of the CFPA. "Had Congress intended for State enforcement authority under section 1042 not to be subject to these limits (even though the Bureau is subject to those limits), it would have said so explicitly," according to the CFPB, as "the enforcement scheme that Congress carefully crafted in section 1042 would make little sense if States were not subject to the limits in section 1027 and 1029."
The CFPB also is rescinding its prior interpretation of Section 1042 insofar as it permitted states to "bring (or continue to pursue) actions under section 1042 even if the Bureau is pursuing a concurrent action against the same entity." This is based on the agency's current policy "to reduce regulatory and compliance burdens, and to eliminate wasteful, duplicative, and unnecessary regulatory and enforcement activity," as well as the agency's reading of the notification and intervention provisions of the CFPA to "contemplate joint, not parallel, State and Bureau actions." The CFPB underscores, however, that this rescission "does not affect States' ability to undertake independent enforcement or regulatory action when the Bureau has not initiated its own action against an entity" and that such rescission "is not altering, limiting, or affecting the authority of States to take any action authorized by any separate provision of State or Federal law." The new interpretive rule is effective as of the May 15, 2025, date of publication in the Federal Register.
The CFPB's proposals are in line with its objective to eliminate all agency-issued documents that expand beyond the CFPB's statutory scope. Prior to these latest proposals, the CFPB also proposed rescinding the Nonbank Registry Rule, as well as amendments to the Rules of Practice for Adjudication Proceedings and Procedures for Supervisory Designation Proceedings, as Holland & Knight previously reported. While CFPB leadership continues its agencywide review of all rules, guidance documents and advisory opinions, any item that improperly imposes "rights or obligations through guidance" could be rescinded as a means to scale back the agency's oversight authority.
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