CFPB Uncertainty: States & Courts Step In
- As the Consumer financial Protection Bureau (CFPB) reduces its rulemaking and enforcement, states are stepping in to fill the gap.Lawmakers and attorneys general are initiating lawsuits and legislation...
- New York Attorney General Letitia James, for example, has sued earned wage access providers DailyPay and MoneyLion, alleging abusive lending practices.
- The New York action follows a 2022 CFPB lawsuit against MoneyLion for alleged violations of the Military lending Act.
As the CFPB takes a step back, states are aggressively stepping up to protect consumers. Expect to see meaningful changes as states like New York, Illinois, and Pennsylvania launch new consumer financial protection laws and lawsuits targeting predatory lending practices. New York is already suing companies like MoneyLion over alleged abusive lending terms, while Illinois moves to establish its own state-level financial regulator, setting the stage for a complex regulatory landscape. this signals a shift in power, presenting challenges for financial service providers. News Directory 3 delivers this critical update to help you understand the evolving world of financial regulations. Discover what’s next for the consumer financial protection.
States Step Up Consumer Financial Protection Amid CFPB Uncertainty
Updated June 10, 2025
As the Consumer financial Protection Bureau (CFPB) reduces its rulemaking and enforcement, states are stepping in to fill the gap.Lawmakers and attorneys general are initiating lawsuits and legislation addressing areas traditionally overseen by the federal watchdog. this surge in state-level activity creates a more complex and fragmented regulatory landscape for financial service providers.
New York Attorney General Letitia James, for example, has sued earned wage access providers DailyPay and MoneyLion, alleging abusive lending practices. James contends that the firms’ fees on short-term loans equate to annual interest rates as high as 750%,effectively making them payday loans.
The New York action follows a 2022 CFPB lawsuit against MoneyLion for alleged violations of the Military lending Act. MoneyLion has challenged the CFPB’s funding as unconstitutional. A New York federal judge recently ruled that MoneyLion can challenge the CFPB’s funding but must first address the charges related to service members.
new york city Comptroller Brad Lander stated in a June 9 press release that states and cities must act to protect consumers, given the federal government’s reduced capacity. He advocated for the End Loansharking Act, which would subject earned wage access and merchant cash advances to state lending and usury laws.
Illinois is also considering legislation to establish consumer financial protection laws and a financial protection fund. The bill’s text asserts that the absence of a dedicated financial services regulator leaves Illinois residents vulnerable. The proposed state regulator would mirror core CFPB oversight, covering risk, cybersecurity, and licensing.
Pennsylvania expanded its enforcement authority last month and introduced new consumer reporting tools.
The CFPB, prior to the Trump administration, issued guidance recommending that state attorneys general have unimpeded authority to initiate consumer protection investigations and that states broaden consumer protection laws to include business-to-business transactions.
“The federal government is no longer equipped to safeguard consumers. States and cities must step in to fill the gap… state and local governments have a range of tools to combat abusive financial practices and preserve access to safe, affordable financial services.”
what’s next
The trend of states taking a more active role in consumer financial protection is expected to continue, particularly in areas where federal oversight is perceived as lacking. This could lead to further divergence in regulations across states, requiring financial service providers to navigate an increasingly complex legal environment.