Fighting to Ensure Consumer Protections Are Not Reversed

NEW YORK – New York Attorney General Letitia James recently led a coalition of 24 attorneys general fighting to ensure that the states can continue to benefit from powerful tools under Title X of the Dodd-Frank Act that help them protect consumers from fraud and abusive consumers practices. In an amicus brief filed in Seila Law, LLC v. Consumer Financial Protection Bureau, Attorney General James and the coalition argue that the U.S. Supreme Court should preserve the Consumer Financial Protection Bureau (CFPB) and other significant consumer protections provided by Title X.

“Following the Great Recession, the Consumer Financial Protection Bureau was created as an independent enforcer of consumer protection laws to ensure that consumers could never again be so egregiously defrauded, deceived, or misled by private companies,” said Attorney General James. “Opponents are now asking the Supreme Court to undo years of financial and consumer protections that have saved Americans hundreds of millions of dollars and remedied countless abusive and fraudulent practices. Our coalition will continue fighting to ensure the existence of the CFPB and, more importantly, the continuation of the protections that help the states ensure the financial protection of the American people.”

In 2017, the CFPB commenced an investigation into the California law firm Seila Law for its debt-relief practices. Seila Law sought to block the investigation entirely, arguing that the CFPB is unconstitutionally structured because the agency’s director may only be terminated by the president “for inefficiency, neglect of duty, or malfeasance in office.” According to Seila Law, this for-cause removal provision impinges on the Executive Power and violates the Constitution’s separation of powers clause. The U.S. District Court for the Central District of California and U.S. Court of Appeals for the Ninth Circuit both rejected Seila Law’s arguments and upheld the constitutionality of the CFPB.

Seilia Law has now appealed to the U.S. Supreme Court, again arguing that the CFPB is unconstitutional and that the entirety of Title X of the Dodd-Frank Act — which includes the provisions that created the CFPB, as well as powerful new tools for state consumer protection enforcement — must be struck down.

In the amicus brief filed today, Attorney General James and the coalition argue that the CFPB’s structure is constitutional and that — even if the for-cause removal provision is invalid — the CFPB and the rest of Title X should survive. The brief highlights the many ways that the states have worked cooperatively with the CFPB to root out fraud and abusive consumer practices in the market, including joint enforcement actions and information sharing. The brief also highlights the various provisions of Title X that are unrelated to the CFPB, but nonetheless give the states powerful tools to combat fraud and abusive practices.

As the brief argues, these provisions provide important support to the states’ efforts to protect consumers and are independent of the CFPB. The brief concludes by arguing that these new state powers should survive even if the for-cause removal provision or the CFPB itself is unconstitutional.

Joining Attorney General James in filing today’s amicus brief are the attorneys general of California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia.

This matter was handled by Assistant Solicitor General Caroline A. Olsen, Deputy Solicitor General Steven C. Wu, and Solicitor General Barbara D. Underwood — all of the Division of Appeals and Opinions.