The Consumer Financial Protection Bureau (CFPB) made a significant and unexpected move on Thursday, dropping five high-profile lawsuits against major companies accused of deceiving consumers. This decision is seen as part of a broader political and legal struggle over the future of the agency, which has been at the centre of a contentious battle between the Trump administration and consumer advocates.
Among the cases dismissed were actions against notable corporate entities, including Capital One Financial, the ninth-largest bank in the United States, and Rocket Homes, a prominent real estate referral platform. Additional lawsuits targeted a major student loan servicer and two consumer lending companies. The abrupt withdrawal of these cases raises questions about the agency’s current trajectory and its ability to hold corporations accountable.
The decision to abandon these lawsuits comes amid a freeze in the CFPB’s operations, which has been attributed to a stop-work order imposed by the Trump administration. Critics have raised concerns that the administration is seeking to undermine the watchdog by slashing its resources and significantly curtailing its legal powers. Just last week, the agency dismissed a case involving SoLo Funds, an online lender, further fuelling fears that the administration intends to dismantle much of the agency’s work.
Eric Halperin, who resigned as the CFPB’s head of enforcement earlier this month, expressed concerns about the broader implications. Halperin noted that the agency had cancelled contracts with key expert witnesses and that the operational halt was preventing the progress of numerous ongoing lawsuits.
The CFPB, which was established under the Dodd-Frank Act in 2010 in response to the financial crisis, has faced growing opposition from Republicans and corporate groups. These groups have accused the agency of overreaching and wielding excessive power. Many of the cases dismissed this week were initiated during the tenure of former CFPB Director Rohit Chopra, who had filed lawsuits against companies such as Rocket Homes and Capital One in the final months of the Trump administration. Critics argue these suits were politically motivated, designed to push controversial cases through before the change in leadership.
However, not all of the cases that the CFPB abandoned were filed under the previous administration. The agency also dropped lawsuits from earlier this year, including a case involving a student loan servicer accused of improperly collecting on discharged debts. The dismissal of these cases is troubling for those who rely on the CFPB to protect consumers from predatory financial practices.
In theory, state attorneys general have the authority to pursue similar actions, as they are empowered to enforce consumer protection laws within their own jurisdictions. However, it remains uncertain whether they have the resources to take on these cases at the scale of the CFPB.
The timing of these actions coincides with a high-stakes legal battle over the CFPB’s future. A federal judge recently blocked efforts by Acting Director Russell Vought to lay off a significant portion of the agency’s staff, following a lawsuit filed by a union representing CFPB employees. Vought had claimed that he intended to streamline the agency, making it more efficient in fulfilling its statutory duties.
As the battle over the CFPB’s future continues, both consumer advocates and industry groups will be closely watching to see whether the agency’s legal and enforcement powers continue to shrink under the current administration. The fate of the CFPB and its ability to protect American consumers remains uncertain, with political forces on both sides of the aisle shaping its direction.
