On May 15, the CFPB published a Federal Register notice withdrawing its interpretive rule on the scope of state enforcement under Section 1042 of the CFPA. Under the new administration, the Bureau deemed the interpretative rule to be improper guidance. As previously covered by InfoBytes, the rule also stated that Section 1042 did not restrict states from bringing concurrent enforcement actions with the Bureau — a position the Bureau now rejects.

In its move rescinding the rule, the Bureau emphasized that state authority under Section 1042 is limited to actions enforcing the CFPA. The Bureau stated that the May 2022 interpretive rule ignored this statutory limitation by allowing states to bring an action whenever “a covered person or service provider violates any of the Federal consumer financial laws” — not just the CFPA. The reversal suggests a shift away from the concurrent enforcement actions by states and the CFPB under numerous federal consumer protection laws.

Consistent with the Bureau’s current interpretation, Section 1042 permits states to enforce only the CFPA and its regulations, asserting that it would not be “altering, limiting, or affecting the authority of States to take any action authorized by any separate provision of State or Federal law.”

Visit our resource center, CFPB Pause: Where From Here?, to stay on top of the latest and what it may mean for the federal and state regulatory and enforcement landscape.