5 ways the CFPB has advocated for consumers in the credit industry

It’s hard to find a government agency more polarizing than the Consumer Financial Protection Bureau. Proponents (mostly Democrats) say it’s a necessary watchdog that polices the financial industry and has saved consumers billions of dollars. Critics (mostly Republicans) say it’s a rogue bureaucracy with too much power and too little oversight.

Have a question about credit cards? E-mail me at ted.rossman@bankrate.com and I’d be happy to help.

During President Donald Trump’s first term, CFPB enforcement actions plummeted, and the bureau took a mostly hands-off approach to financial regulation. Meanwhile, the CFPB was very aggressive during the presidencies of Barack Obama and Joe Biden. Early signs are that the Trump 2.0 CFPB will be significantly more lax than the Trump 1.0 CFPB (which is saying something). More on this in a moment.

For now, let’s examine why you should care about the CFPB, highlighting five ways the bureau has sought to reshape the credit industry (ranked in increasing order of importance).

5. Guarding against rewards program devaluations

In the final days of the Biden Administration, the CFPB called attention to what it termed “bait-and-switch credit card rewards tactics.” Devaluation of rewards programs has become commonplace across the industry. For example, a free flight might cost 25,000 miles one year and then 30,000 or 35,000 the next year. It’s a big reason why you should seek to both earn and burn rewards strategically. These programs are essentially currencies with fluctuating values.

I was disappointed to see that about 1 in 4 rewards credit cardholders didn’t redeem any rewards over the past year, according to Bankrate’s recent Credit Card Rewards Survey. While program changes (usually in the card issuer, airline or hotel chain’s favor) are inevitable, redeeming rewards frequently is the rewards credit card consumer’s best defense. Your rewards will probably be worth less, not more, the longer you hold onto them.

Alas, the CFPB didn’t enact any binding rules on this topic, but it did call attention to the issue via the aforementioned communications as well as a 2024 joint hearing with the Department of Transportation. Perhaps it would have done more if the election result had turned out differently.

4. Capping credit card late fees

In early 2024, the CFPB announced a plan to cap credit card late fees at $8, compared with the industry average of $32. The bureau said late fees had turned into a profit center rather than a legitimate reimbursement for lost revenue. The rule — which would have saved consumers more than $10 billion annually, according to the CFPB — would have allowed card issuers to charge more if they could prove they suffered greater losses. The implication, however, was that they wouldn’t be able to show that.

Banking industry groups challenged the rule in court and received a temporary injunction preventing it from taking effect. After the election, the Trump Administration declined to defend the CFPB’s rule in court, so it’s not happening.

Unfortunately, fees can be like Whack-a-Mole (one goes down, another pops up). Some card issuers had already pulled other levers to offset the looming loss of late fee revenue, such as raising interest rates and/or adding charges for paper statements. The sad irony is that the late fee cap didn’t go through yet some of these other changes have stuck.

3. Cracking down on credit repair companies

Late last year, the CFPB made its largest ever distribution from its victims relief fund, a $1.8 billion disbursement to 4.3 million consumers who were allegedly wronged by credit repair companies such as Lexington Law and CreditRepair.com.

“Lexington Law and CreditRepair.com exploited vulnerable consumers who were trying to rebuild their credit, charging them illegal junk fees for results they hadn’t delivered,” then-CFPB director Rohit Chopra said at the time.

The CFPB secured a legal judgment against these credit repair providers for violating the Telemarketing Sales Rule. Basically, the rule says telemarketers can’t accept payments from consumers until they provide documentation of promised results, with at least a six-month waiting period. One of the main criticisms of credit repair companies is that they can over-promise and under-deliver, requiring upfront payment in exchange for uncertain future results. The CFPB’s action protected vulnerable consumers, including many with lower incomes and lower credit scores, who did not get the benefits they were promised.

2. Making it easier for stay-at-home spouses to get credit

In 2013, the CFPB updated regulations to allow credit card issuers to consider joint income as part of credit card applications, thereby enabling stay-at-home parents to list shared household income on credit card applications even if they do not earn a salary outside the home.

“Stay-at-home spouses or partners who have access to resources that allow them to make payments on a credit card can now get their own cards,” said Richard Cordray, the CFPB director back then.

Before this ruling, credit card applicants needed to list their individual incomes on card applications, preventing many stay-at-home spouses from qualifying for cards in their own names. This is important because, while they could access credit as authorized users on their spouses’ accounts, many lost access if the relationship ended (if the couple divorced, for instance, or if the spouse died). Credit bureaus place more emphasis on consumers’ own accounts as opposed to accounts with authorized user status. It’s important to have credit in your own name, and this CFPB regulation made that more feasible for stay-at-home spouses and partners.

1. Taking medical debt off credit reports

In 2022 and 2023, under pressure from the CFPB, the three major credit bureaus (Equifax, Experian and TransUnion) agreed to remove most medical debts from consumers’ credit reports. These included paid medical collections, medical collections less than a year old and medical collections under $500. In early 2025, the CFPB finalized a rule to remove all medical debt from credit reports, but it has been placed on hold by a federal judge and there’s a good chance it will be abandoned by the new administration.

Nonetheless, the 2022 and 2023 changes wiped out about 70 percent of the medical debt on Americans’ credit reports, according to Equifax. And the credit reporting industry’s voluntary changes are likely to stick. Even without the final rule, the only medical debts that should appear on consumers’ credit reports moving forward are unpaid medical collections over $500 that have been in collections for more than a year.

The CFPB and other consumer advocates believe that medical debt is not as predictive of future loan default as other forms of debt. Essentially, your credit score is supposed to predict your likelihood of defaulting on a loan. Research shows that whether you paid a mortgage, car loan or credit card on time is much more instructive than whether you paid a medical bill on time. Medical bills can represent one-time, perhaps even life-or-death scenarios. They’re not the same as routine monthly bills. And the insurance claims process can be confusing. Some of these payments are delayed for clerical reasons and sometimes the ultimate financial responsibility lies with the insurance company, not the patient.

While the CFPB attempted (thus far unsuccessfully) to remove all medical debt from credit reports toward the end of Biden’s term, the related changes that did take place improved millions of Americans’ credit scores, potentially enabling them to access more credit at lower prices.

The CFPB and the current Trump Administration

The CFPB has existed since 2010, with varying levels of enforcement activity during the past 15 years. What’s to come during the current administration remains to be seen, but we have had some hints during Trump’s first few weeks in office that activity may be minimal to nonexistent.

In recent weeks, the Trump Administration has taken several steps to substantially weaken the bureau. The president fired Chopra, the former director and a Biden appointee, in early February. Shortly thereafter, acting CFPB director Russell Vought “directed employees not to issue any proposed or formal rules, stop pending investigations and not open new investigations, halt all stakeholder engagements and abstain from issuing public communications, among other things,” according to CBS News.

Basically, Vought told the CFPB staff not to do anything until further notice. Then, on March 2, the CFPB’s chief legal officer clarified that employees should be performing statutorily required work, according to The Hill. Vought also declared that the CFPB will “not be taking its next draw of unappropriated funding,” fueling speculation the agency could be dissolved. Employees have been told not to come into the office and the building’s lease was canceled.

A few weeks later, Vought indicated in a court filing that the CFPB will continue to exist, but in a “more streamlined and efficient” manner. Jonathan McKernan, who has been nominated to fill the CFPB director position on a more permanent basis, said something similar during a Feb. 27 confirmation hearing, but several influential Democrats expressed skepticism.

Sen. Jack Reed (D-R.I.) offered a particularly quotable quip: “You’re going to be placed in a very difficult position,” he told McKernan during the hearing. “You do not appear to have much presidential support or OMB (Office of Management and Budget) support, and I have this sinking feeling that you’re departing Liverpool on the Titanic. Good luck.” McKernan has not yet been officially confirmed by the Senate as the agency continues to twist in the wind.

The bottom line

Consumer advocates are concerned about this key question: If the CFPB isn’t looking out for your financial interests, then who is? Love it or hate it, one thing is for sure: The CFPB has been effective at getting responses from financial institutions. Its consumer complaint database gathered nearly 5 million submissions from January 2020 through September 2024, according to the Consumer Bankers Association. The CFPB says companies generally respond within 15 days. The complaint database is still open for submissions, but is anyone monitoring it?

With the CFPB in a severely weakened position, if you have a financial protection issue that you can’t resolve with the financial institution, I suggest contacting a local regulator, perhaps your state attorney general’s office or a state-level financial services department. It doesn’t seem like the CFPB is going to do much over the next four years, which will probably leave states to fill in the gaps where they can. Some will be a lot more active than others.

Massachusetts, for instance, has been an early leader. The state’s attorney general, Andrea Joy Campbell, recently released anti-junk fee regulations straight out of the Biden/Chopra playbook – precisely the kinds of policies that are no longer being pursued at the federal level.