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"Service providers” are subject to the CFPB’s “unfair, deceptive or abusive acts or practices” authority. Service providers include any person “designing, operating or maintaining” or processing transactions related to consumer financial products or services. However, any person who provides ministerial support services or a “time or space” for advertising a consumer financial product or service is exempt from the definition of service provider. The interpretive rule states that the “ministerial services” language in the exception narrows the “time and space” exemption so that any digital marketing firms that are “materially involved” in the development of content strategy, targeting customers based on their behavior and affecting their purchase behavior may be deemed a service provider.
Director Chopra also took another opportunity to reaffirm his position that state attorneys general (“AGs”) are permitted to peruse claims under the Consumer Financial Protection Act, including the new interpretive rule. Simultaneously with the release of the interpretive ruling, the CFPB announced more than 20 arrangements with state AG offices. The number of statements from the CFPB regarding the involvement of state AGs in enforcing consumer financial protection laws has grown significantly under Director Chopra’s leadership. As we reported, at NAAG’s Capital Forum meeting in December 2021, Director Chopra committed to combat efforts to preempt state consumer protection laws and also to lend the resources of his office to states in enforcement efforts against businesses subject to CFPB regulation (notably, the banking and financial services industries). We also reported that a May 19, 2022 interpretive ruling from the CFPB sought to affirm state authority to initiate enforcement actions based upon violations of the Consumer Financial Protection Act and other federal and state consumer financial protection statutes.
Congressional Republicans have taken notice of the relationship between the CFPB and state AGs. On July 28, 2022, House Financial Services Committee Republicans sent a letter to Director Chopra accusing the CFPB of colluding with state AGs in a manner that violates the Consumer Financial Protection Act. The letter specifically cites the CFPB’s May 19, 2022 interpretive ruling as the prime example of the CFPB’s overreach. The letter seeks more information from Director Chopra regarding the authority that the CFPB relies on when state AGs join existing CFPB actions and the safeguards sounding duplicative state actions.
Client Alert 2022-208
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