Consumer Protection and Consumer Data

Before you take out a loan or mortgage from financial institution that is not a bank, you will want to check the registry being created by the Consumer Financial Protection Bureau (CFPB).

The financial crisis of 2008 revealed that although banks have a great deal of oversight of their lending practices by federal regulators, other financial institutions do not.  These financial institutions include debt collectors, payday lenders, and credit reporting companies.  Most importantly, they include nonbank mortgage lenders.  Many of these companies are not licensed or registered with any agency or registry. 

When financial companies break consumer laws, they are usually assessed a fine by a court or the CFPB.  However, many companies see these fines as the “cost of doing business” and proceed to continue their illegal practices.  With the creation of this new registry, the CFPB will be able to track lawbreaking companies, hold them accountable, and prevent corporate recidivism. 

This registry will be used by state attorneys general, state regulators, and other law enforcement agencies to ensure these companies are paying their fines and not continuing to participate in illegal activities such as scams, fraudulent schemes, and other illegal conduct that harms the public.  Most importantly the public, including investors, creditors, business partners, and average consumers will be able to vet the financial institutions they deal with. 

The Consumer Financial Protection Bureau is an official 21st century government agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive.  It provides financial education for individual consumers on such topics as auto loans, credit cards, and frauds and scams.  It also provides data for researchers on their Public Data Inventory section and provides access to FOAI requests.  It also provides legal information on the rules and regulations governing consumers and financial institutions serving them. 

Consumers can submit complaints about financial products or services by visiting the CFPB’swebsite or by calling (855) 411-CFPB (2372).

Employees who believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to whistleblower@cfpb.gov.

Junk Fees to be Scrapped

Everyone – students, families, Democrats, Republicans, Representatives, Senators, the President, even universities and colleges themselves – agree that higher education is too expensive.  Both the legislative and executive branches have pledged to implement policies that lower those costs.  Last Thursday, theBiden-Harris Administration announced their plans to help in this area with strategies to “crack down on junk fees.”  These junk fees include non-refunded meal account funds, bank fees associated with using a college-sponsored credit card or banking account, automatic charges for textbooks and supplies included in tuition, and finance charges for taking out a student loan. 

 Colleges and universities often partner with banks for disbursement of financial aid through credit or debit cards.  Unfortunately, many of these bank cards include excessive and/or hidden fees that can cost students significantly.  Problems with these fees have recently been reported to Congress by the Consumer Financial Protection Bureau (CFPB) and were reported by the Government Accountability Office (GAO) as far back as 2014. 

Another, often hidden, fee students and parents incur is the loan origination fee.  This administrative fee can be from 1 to 4 percent of the amount of the loan and is frequently added to the loan amount and, therefore, continuously incurs interest throughout the life of the loan.  According to the Biden-Harris Administration “These fees are a relic of an era when the government compensated private lenders to issue these loans.  Today, this fee is nothing more than a tax imposed on students by the government, costing consumers more than $1 billion annually.” 

Colleges and universities are not on board with all the Administration’s plans, however.  For instance, universities would now be required to return all unused “flex dollars” in the students’ meal plan accounts.  Moreover, students would have to opt-in to include textbook fees into their tuition charges.  The Administration and the Department of Education say this will allow students to be aware of what prices they pay for textbooks and allow them to find cheaper sources for materials.  Universities contend that this will impede their ability to provide students with materials at below market prices on the first day of class. 

These announced strategies build upon regulations released in late 2023 which include investing in the Open Textbooks Pilot Program to lower textbook costs, requiring universities to adhere to more stringent requirements of transparency on all college costs, requiring universities when they act as lenders to adhere to federal consumer financial protection laws, and preventing colleges from withholding transcripts of courses paid for with federal money.