CFPB Signals Continued Involvement in Litigation with State Attorneys General

While the Consumer Financial Protection Bureau (“CFPB”) may have halted certain operations, it is remaining active in certain litigation, including cases brought by multistate attorneys general. Recently, the CFPB signaled its intent to continue litigating an ongoing lawsuit against a debt relief company, StratFS, LLC (f/k/a Strategic Financial Solutions, LLC) (“StratFS”). That case was originally filed by the CFPB and the state attorneys general of seven states: New York, Colorado, Delaware, Illinois, Minnesota, North Carolina, and Wisconsin. In a letter filed with the court, the CFPB stated that it agrees with the position of the attorneys general and would sign on to their recent filings if permitted to do so.

The matter was filed in the U.S. District Court for the Western District of New York and accuses StratFS of running an illegal debt-relief enterprise that siphoned hundreds of millions of dollars in exorbitant, illegal fees from vulnerable consumers. Specifically, the complaint alleges that StratFS violated the Telemarketing and Consumer Fraud and Abuse Prevention Act, the Telemarketing Sales Rule, the Consumer Financial Protection Act, as well as New York and Wisconsin state laws, by charging illegal advance fees and falsely claiming that lawyers would provide debt relief. The complaint seeks permanent injunctive relief, redress for consumers, and civil money penalties.

The CFPB announced its intent to continue the StratFS matter on the same day that it filed a notice that it will continue litigating a lawsuit against MoneyLion Technologies, Inc., accusing the online lender of imposing illegal and excessive charges on servicemembers and their dependents. This week, the CFPB also informed a court that it intends to proceed with a case filed against FirstCash, Inc. and its subsidiaries for allegedly unlawfully imposing excessive charges on loans to servicemembers and their dependents. The continuation of these matters marks a shift from the CFPB’s recent dismissal of several pending cases, including some last-minute filings under the previous administration and others that have been pending for over a year.

It is widely anticipated that the Trump administration will curtail CFPB enforcement activity while states will step up their efforts to fill any gaps. However, these actions serve as a reminder that the CFPB will pursue select matters—and may partner with states—particularly if they involve alleged fraud or specific classes of individuals, like seniors and veterans. Companies should remain informed about state and federal financial laws and incorporate consumer protection principles into their business practices and pay close attention to matters announced by state attorneys general.