The Consumer Financial Protection Bureau ("the Bureau" or CFPB) released an Interpretive Rule—which is exempt from notice-and-comment requirements of the Administrative Procedure Act—that sets out its view on the power of states to bring enforcement actions pursuant to the federal Consumer Financial Protection Act (CFPA). Of note, under the Bureau's interpretation of the CFPA, states can enforce consent orders issued by the Bureau, and the limits applicable to the Bureau's enforcement authority do not apply to states. The Interpretive Rule also may signal the Bureau's apparent comfort with state regulators and state attorneys general bringing specific enforcement actions under CFPA without first consulting with the CFPB.

The CFPB also announced it would propose additional means to promote state attorney general enforcement of federal consumer financial law and ways to facilitate victim redress. The announcements are part of efforts by CFPB Director Rohit Chopra to support state enforcement activity.

The Interpretive Rule provides the following:

Not mentioned in the Interpretive Rule are the CFPA's notice requirements on when state officials can act under the CFPA, the CFPB's ability to intervene, and whether CFPA remedies are available to states. By taking this action, the CFPB appears to be laying the groundwork for states to step in as first responders to alleged legal violations to fill in gaps in federal enforcement. Although not decisive, any future challenge to state authority may require a court to consider the Bureau's interpretation of its organic statute with deference.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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