CFPB To Create Public Record of Financial Company Wrongdoing

Starting next year, you’ll be able to look up any financial company you’re doing business with and see all the times they’ve been punished for breaking consumer protection laws.

The Consumer Financial Protection Bureau (CFPB) is moving forward with plans to create a public database of consumer protection law violations on the part of financial institutions that aren’t banks, the bureau said Monday. The bureau plans to put up a website next year showing the data, which will cover payment companies, credit reporting agencies, debt collectors, student loan servicers, auto lenders, and other kinds of companies dealing with consumer finance in some way, bureau officials said in a conference call with reporters.

First proposed in 2022, the database would list all the times that companies have been fined or punished by federal regulators, state attorneys general, and other law enforcement authorities, but not penalties from private lawsuits. It would also list settlements the companies have brought to resolve claims of wrongdoing.

Once launched, the website will give members of the public and investors an easy way to see how often companies have run afoul of consumer finance laws. It also could help regulators identify and punish businesses that repeatedly break the law, the bureau said. 

“Too many American families and businesses have been harmed by repeat offenders in a rinse-repeat cycle of illegal activity or bad actors see fines and penalties as just the cost of doing business,” bureau director Rohit Chopra said in a conference call with reporters. “ And throughout our economy, we have seen fraudsters and scam artists get caught in one part of the country only to restart their scheme in a new place hoping to not get caught again.”

The database will include records going back to 2017, and companies that have to pay fines or settle accusations from regulators will have to register.

Chopra cited several well-known companies that have repeatedly been dinged by regulators. For example, MoneyGram, a wire transfer service, had to pay $115 million in refunds to customers in 2023 after the Federal Trade Commission (FTC) found it had violated a court order to better protect its customers from sending money to scammers. 

Another is TransUnion, one of the three major credit reporting agencies, which the bureau and the FTC have repeatedly sued for mishandling customer records. 

The Financial Technology Association, a trade group representing financial technology firms, pushed back against the proposal when it was first introduced, saying it would “leave people with fewer financial options and stifle innovation” in a statement.