On November 8, the U.S. District Court for the Northern District of Texas received a complaint from a bank suing the CFPB, challenging the Bureau’s enforcement actions under the CFPA and the EFTA. The CFPB’s enforcement began in 2021 with a civil investigative demand. The bank claimed the CFPB’s investigation into its implementation of the Treasury’s Direct Express program was an “ultra vires investigation,” alleging that the Bureau’s actions regarding the bank’s fraud controls under UDAAP were beyond the CFPB’s statutory authority.

The bank administered the Direct Express program under the Treasury’s oversight since 2008. The Treasury selected the bank to provide federal benefit recipients with debit card accounts and exercised significant control over the program. Despite this oversight, the CFPB’s investigation focused on alleged deficiencies in customer service and fraud prevention, which the institution contended these aspects were approved by the Treasury.

The lawsuit included four counts for relief: (1) declaring that the CFPB’s investigation exceeded its authority under the CFPA regarding customer service; (2) declaring that the investigation exceeded its authority under the EFTA regarding fraud controls; (3) declaring that the CFPB’s funding structure is unconstitutional; and (4) asserting that the CFPB’s actions violated the institution’s due process rights.

The bank now seeks declaratory and injunctive relief, including a judgment that the CFPB’s actions are unlawful. The bank argued the CFPB’s funding method is unconstitutional since it violates both the Appropriations Clause and the Dodd-Frank Act, rendering its actions since 2022 as illegal.