On June 18, the CFPB published a proposed rule in the Federal Register amending its 2013 rule implementing the CFPA provision establishing the Consumer Financial Civil Penalty Fund. The proposed rule rescinds aspects of the 2013 rule stipulating that that the CFPB could allocate funds collected via civil money penalties for consumer education and financial literacy programs. The Bureau took the position that the procedures outlined in the 2013 rule “provide neither adequate guardrails for the agency’s exercise of its discretion nor adequate transparency to the public regarding a potentially significant expenditure.”

As previously covered by InfoBytes, under the CFPB’s 2013 final rule, all civil penalties obtained by the CFPB are deposited into the Civil Penalty Fund which may be used to compensate victims and fund consumer education and financial literacy programs. The CFPB reported in the proposal that, since the 2013 rule, it has allocated more than $3.6 billion from the fund to victims of activities subject to civil penalties under federal consumer financial laws. Of the funds remaining in the Civil Penalty Fund, $28.8 million was allocated to a single consumer education program between FY 2013 and FY 2016.

The Bureau set a comment deadline of July 18 and stated that the final rule would take effect upon publication in the Federal Register.

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.