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The CFPB Issues Its 2022 Fall Rulemaking Agenda

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On January 4, the Consumer Financial Protection Bureau (CFPB) issued its 2022 Fall Rulemaking Agenda containing pre-rule, proposed rule, and final rules under consideration. The CFPB releases regulatory agendas twice a year in voluntary conjunction with a broader initiative led by the Office of Budget and Management to publish a Unified Agenda of Regulatory and Deregulatory actions across the federal government. In the preamble to the Federal Register notice, the CFPB states that the information is current as of September 30, 2022 and identifies regulatory matters the CFPB “reasonably anticipates” having under consideration during the period from December 1, 2022, to November 30, 2023. The CFPB has not yet posted a blog or issued a press release about the agenda.

Highlights from the regulatory agenda include the following:

  • Pre-rule Stage:
    • Overdraft Fees:
      • Whether Regulation Z applies to overdraft fees depends on whether those fees are considered finance charges. According to the CFPB, “[w]hile the nature of overdraft services, including how accounts can be overdrawn and how financial institutions determine whether to advance funds to pay the overdrawn amount, has significantly changed since 1969, the special rules [contained in Regulation Z] remain largely unchanged.” The CFPB states it is considering whether to propose amendments to Regulation Z with respect to those rules.
    • Non-sufficient Funds (NSF) Fees:
      • In explaining the difference between an overdraft and an NSF fee, the CFPB states when a customer engages in a transaction that exceeds their account balance, “[s]ometimes the depository institution will pay that transaction, resulting in an overdraft, but in many situations the depository institution will decline to pay the transaction and charge the consumer an NSF fee.” While in the past NSF fees comprised a significant source of revenue for depository institutions, the CFPB concedes that lately some financial institutions have voluntarily stopped charging such fees. Still, the CFPB indicates in its agenda that it is considering new rules regarding NSF fees.
      • In October 2022, we posted on the CFPB’s guidance regarding overdraft and NSF fees here.
    • Fair Credit Reporting Act:
      • This is noteworthy, but cryptic, in that the CFPB simply states it “is considering whether to amend Regulation V.” We will monitor and report on any developments.
    • Personal Financial Data Rights:
      • Section 1033 of the Dodd-Frank Act provides that a covered entity must make available to consumers, upon request, transaction data and other information concerning a consumer financial product or service. Section 1033 also states that the CFPB must issue rules to promote the use of standardized formats for information made available to consumers.
      • In November 2020, the CFPB published an Advance Notice of Proposed Rulemaking concerning implementation of section 1033. In October 2022, the CFPB outlined options to strengthen consumers’ access to, and control over, their financial data. The next step in the rulemaking is for the CFPB to convene a Small Business Regulatory Enforcement Fairness Act panel and issue a report summarizing feedback it receives. The agenda states that a report is expected in February 2023.
    • Proposed Rule Stage:
      • Credit Card Penalty Fees:
        • The CFPB is considering whether to propose amendments to the Credit Card Accountability Responsibility and Disclosure Act of 2009 relating to penalty fees levied by card issuers, including the safe harbors for penalty fees.
        • In June 2022, the CFPB issued an advance notice of proposed rulemaking seeking information from credit card issuers, consumer groups, and the public regarding credit card late fees. The CFPB is currently considering the comments received. The agenda states that a proposed rule is expected in January 2023.
      • Nonbank Registration: Nonbank Covered Persons Subject to Certain Enforcement Orders
        • As we discussed here, the CFPB is developing a proposed rule that would require certain nonbank covered entities (with exclusions for insured depository institutions and credit unions) that are under certain final public orders issued by a federal, state, or local agency in connection with the offering or provision of a consumer financial product or service to report the existence of such orders to a CFPB registry. The CFPB would then include all final public written orders and judgments (including consent and stipulated orders and judgments) issued by the CFPB or any government agency for violation of certain consumer protection laws on an online registry.
        • The agenda states the proposal was issued in December 2022, but does not provide an expected date for the final rule.
      • Nonbank Registration: Terms and Conditions
        • The CFPB is developing a proposed rule that would require supervised nonbank entities to provide information about their use of certain terms and conditions in standard-form contracts. Specifically, the CFPB is developing a proposal to collect standard terms used in contracts that are not subject to negotiating or are not prominently advertised.
        • While the agenda states that a proposed rule is expected in December 2022, the CFPB has not yet issued it.
      • Final Rule Stage:
        • Small Business Lending Data Collection Under the Equal Credit Opportunity Act (ECOA)
          • Section 1071 of the Dodd-Frank Act, enacted in 2010, amended ECOA to require financial institutions to report information concerning credit applications made by women-owned, minority-owned, and small businesses.
          • As we discussed here, in September 2021 and after a decade of delay, the CFPB issued a proposed rule to implement section 1071 with more than 900 pages of supplementary material. The CFPB also issued a summary of the proposed rule and a chart of the data points that the rule requires creditors to collect, and it accepted approximately 2,100 comments on the proposal in January 2022.
          • The CFPB previously indicated in its 2022 Spring Rulemaking Agenda that it would issue a final rule prior to March 31, 2023, but this agenda moves that date up to January 2023.

Our Take:

CFPB Director Rohit Chopra foreshadowed several of these rulemaking developments in his June 17, 2022 blog post entitled “Rethinking the approach to regulations.” He stated that the CFPB was seeking to move away from “highly complicated rules that have long been a staple of consumer financial regulation” by moving toward “simpler and cleaner rules.” Director Chopra also noted that the CFPB would “heavily focus[] on implementing longstanding Congressional directives, many of which have gone ignored,” citing the section 1071 small business data collection and reporting rule required by the Dodd-Frank Act as one such example.

In our view, it is noteworthy that issuance of the final rule implementing section 1071 has been accelerated from March 2023 to January. This final rule will impose significant operational and technological challenges for small business lenders to implement the data collection and reporting requirements, which are similar to the Home Mortgage Disclosure Act for mortgage lenders. A faster timeline will likely require small business lenders to quickly marshal resources to implement the rule, depending upon the compliance transition period provided by the CFPB in the final rule. Over time, the section 1071 final rule will result in fair lending scrutiny by the CFPB, other regulators, consumer advocacy groups, and plaintiffs’ attorneys of small business lending data, which will pose regulatory, reputational, and legal risk for small business lenders.

Another notable development is the CFPB’s consideration of further rules to regulate overdraft and NSF fees. Despite the banking industry’s trend toward either eliminating or reducing such fees since 2020 (particularly by large and mid-size banks), the CFPB has continued a campaign against these fees, which it categorizes as “junk fees.” Among other things, the CFPB issued a request for information on junk fees in January 2022, and subsequently issued guidance on unfair practices concerning “surprise” overdraft fees in October 2022. Nonetheless, the overdraft and NSF rulemakings are at the pre-rule stage, so it remains to be seen whether the CFPB will proceed to issue proposed rules for either or both topics.

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