What is “Risk to Consumer”?
Earlier this month, the CFPB responded to a bipartisan Congressional letter seeking the Bureau’s definition of the term “risk to consumer” for certain nonbank entities in the Bureau’s Supervisory Authority. While we appreciate that the CFPB responded, it did not provide substantive clarity on the central question surrounding risk. Interestingly, the CFPB’s initial motive for this rulemaking was aimed at the “fast-growing companies in nontraditional areas of the consumer finance market.”
However, it is concerning that the Bureau has decided to use this authority against established entities that are highly regulated either at the state or federal levels. It is also unfortunate to see the Bureau reiterating the use of unverified “consumer complaints” to spur CFPB action and to serve as a deciding factor while publicly singling out entities.
AFSA has been very involved with this rulemaking, and will continue to engage with the CFPB as we seek a clear definition.
March 15th, 2024
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