In the wake of recent federal directives diminishing the Consumer Financial Protection Bureau (CFPB), state authorities are increasingly stepping in to uphold consumer protections. Michigan Attorney General Dana Nessel has been at the forefront of this movement, emphasizing the CFPB’s significant contributions and reaffirming her office’s commitment to safeguarding Michigan residents.
In a recent statement, AG Nessel not only highlighted the CFPB’s achievements but also renewed her commitment to protecting Michigan consumers as federal oversight becomes uncertain. Touting the CFPB’s success, she emphasized that the Bureau has “won back for American consumers more than $20 billion, as direct payments back to wronged customers or into relief funds for impacted victims.” However, with its future now in question, Nessel made clear that her office stands ready to fill the gap:
“My office’s Consumer Protection Team will continue to enforce the Michigan Consumer Protection Act to hold businesses accountable and defend consumers from illegal and abusive business practices.”
By reaffirming her office’s role, Nessel is making it clear that state enforcement will step in where federal protections may recede. Michigan is one of the first states to take this stance, and it is likely that other state attorneys general will follow suit, ensuring that consumer protection does not fade even as the federal landscape shifts.
New York’s recent move to regulate overdraft fees provides a concrete example of how states are stepping in to protect consumers where federal oversight may be waning. The New York Department of Financial Services (DFS) has proposed new regulations aimed at curbing unfair overdraft and non-sufficient funds (NSF) fees—an issue the CFPB had previously sought to address. These rules would prohibit practices such as processing transactions in a way that maximizes fees, charging NSF fees on transactions declined instantaneously, and imposing multiple fees for the same transaction. Additionally, the proposal seeks to cap overdraft charges and require clearer disclosures to consumers.
As federal uncertainty grows, states like New York are not waiting to see how the CFPB’s future unfolds. Instead, they are taking direct action to implement consumer protections once led at the federal level.
For businesses, this shift in enforcement priorities means that compliance can no longer focus solely on federal regulations—it must account for a patchwork of state-level rules and enforcement priorities. Companies should conduct a comprehensive review of state consumer protection laws, ensuring that policies—particularly those governing fees, lending practices, and disclosures—align with evolving state regulations. To navigate this changing landscape, companies should:
- Conduct a state-by-state compliance review – Identify states with active enforcement efforts and ensure that policies align with state-specific consumer protection laws.
- Assess risk exposure under new state regulations – Pay particular attention to areas where states, like New York, are enacting stricter rules, such as overdraft fees and lending practices.
- Developing playbooks for responding to inquiries from state Attorneys General and related state regulatory bodies.
- Strengthen internal compliance programs – Implement regular audits and monitoring to ensure ongoing compliance with both state and federal requirements.
However, businesses must also recognize that state attorneys general retain the authority to enforce key federal protections, including the Dodd-Frank Act’s prohibition on unfair, deceptive, and abusive acts and practices (UDAAP). Even as federal oversight wanes, state AGs can still bring actions under these provisions, making it critical for companies to assess both state and federal risks when developing compliance strategies.
Ballard Spahr’s State Attorneys General Enforcement Team closely monitors AG enforcement trends and helps clients navigate investigations, regulatory inquiries, and compliance challenges. Our attorneys have extensive experience representing businesses in state-level investigations and enforcement actions, including matters involving consumer finance, advertising practices, data privacy, and unfair and deceptive trade practices. If you have received a civil investigative demand (CID), subpoena, or inquiry from a state attorney general, or if you need guidance on state regulatory compliance, our team is available to assist. Please contact us to discuss your specific situation.
For more insights on state attorney general enforcement trends, visit our Consumer Finance Monitor Blog and explore our recent webinars and events covering key developments in consumer financial services and regulatory enforcement, including the impact of the election on the CFPB.