A decrease in Consumer Financial Protection Bureau ("CFPB" or "Bureau") enforcement activity may motivate state regulators to fill the enforcement void, including by bringing actions under the Dodd-Frank Act. Earlier this year, as part of its deregulatory efforts, the CFPB issued a direct final rule rescinding procedures by which a state official must notify the Bureau when the official takes an action to enforce the Dodd-Frank Act. Because of comments the Bureau received in response to the rule, the CFPB has withdrawn its plan to rescind these notification procedures.
State Authority to Bring Actions Under the Dodd-Frank Act
With some limitations on actions against national banks or federal savings associations, Section 1042 of the Dodd-Frank Act provides that state attorneys general may bring a civil action to enforce Title X of the Dodd-Frank Act or regulations issued under Title X of the Dodd-Frank Act.1 Similarly, Section 1042 provides that a state regulator may bring a civil action or other appropriate proceeding to enforce the provisions of Title X of the Dodd-Frank Act or regulations issued under Title X of the Dodd-Frank Act with respect to any entity that is state-chartered, incorporated, licensed, or otherwise authorized to do business under state law.2 With respect to a national bank or federal savings association, Section 1042 provides that state attorneys general may bring an action to enforce a regulation prescribed by the Bureau under Title X of the Dodd-Frank Act.3
It is commonly understood that enforcing Title X of the Dodd-Frank Act includes enforcing the Act's prohibition on unfair, deceptive, or abusive acts or practices ("UDAAP"). States may choose to bring actions under the Dodd-Frank Act because it authorizes certain remedies for violations of the Act, including recission or reformation of contracts, refunds of money, and disgorgement or compensation for unjust enrichment, among other remedies.4
In addition to the UDAAP prohibition, it is possible that Section 1042 give states the authority to bring actions to enforce the 18 enumerated federal consumer financial laws, such as the Truth in Lending Act and the Fair Credit Reporting Act and their implementing regulations. In 2022, the CFPB published an interpretive rule taking the position that—because Title X declares that it is unlawful for a covered person or service provider to offer or provide any consumer a financial product or service that is not in conformity with the 18 enumerated federal consumer financial laws—states have the authority to bring an action under the Dodd-Frank Act for violations by a covered person or service provider of any of the enumerated consumer financial laws.5 A federal court has agreed with this view.6 The current Bureau has taken a different view. In May 2025, the CFPB rescinded its previously issued interpretive rule and took the position that Congress did not intend to permit states to enforce "any provision of any [f]ederal consumer financial law."7
Notice Requirement
Section 1042 of the Dodd-Frank Act provides that states must provide notice to the Bureau when initiating an action to enforce Title X of the Dodd-Frank Act or regulations issued under Title X of the Dodd-Frank Act.8 The notice must be provided "timely" in the ordinary course, or "immediately upon instituting the action or proceeding in the case of an emergency."9 In addition, the rules provide that the notification must include, at a minimum, the identity of the parties, the alleged facts, and whether there may be a need to coordinate the prosecution.10
In 2012, the CFPB promulgated rules that provide procedures states must follow when providing the required notice.11 The Bureau explained that its rescission of the rules was part of its efforts to "eliminate unnecessary regulations" and stated that the rules "merely restate the notification requirements codified" in the Dodd-Frank Act.
Notably, the rules go beyond what is expressly required by the Dodd-Frank Act. While the statute requires that in the ordinary course states must notify the Bureau "timely" of an action, the rules specify that states must provide notice within 10 days. The rules also expand the information states must include in the notification.
Industry groups pushed back against the rescission of the rules arguing that the rules promote consistent enforcement, with some urging the Bureau to expand the notice requirement to more than ten days.
Bureau Intervention in State Actions
If a state brings an action under Section 1042, the CFPB has the right to intervene and remove the action to federal court, be heard in the action, and appeal any order or judgment, to the same extent as any other party in the proceeding.12 As states become more active in enforcing federal consumer finance law, it is possible that we will see the Bureau increasingly intervene in such actions.
Footnotes
1 12 U.S.C. § 5552(a).
2 Id.
3 Id.
4 Id. § 5565(a)(2).
5 CFPB, "Authority of States To Enforce the Consumer Financial Protection Act of 2010," 87 Fed. Reg. 31940, 31941 (May 26, 2022).
6 Pennsylvania by Shapiro v. Mariner Fin., LLC, No. CV 22-3253, 2024 WL 169654, at *13 (E.D. Pa. Jan. 12, 2024) (holding that a state could bring an action under Section 1042 to enforce the Truth in Lending Act, one of the enumerated consumer financial laws).
7 CFPB, "Authority of States To Enforce the Consumer Financial Protection Act of 2010; Rescission," 90 Fed. Reg. 20565 (May 15, 2025).
8 Id. § 5552(b).
9 Id.
10 Id.
11 12 C.F.R. § 1082.1.
12 12 U.S.C. § 5552(b).
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