The fate of the Consumer Financial Protection Agency is on balance, and with that, it has the scope of government American savings and monitoring of $18 trillion household debt.
Consumer advocates have already sounded the alarm.
“This climate will be ripe for conceived activities,” said Lara Benson, an attorney for the National Community Reinvestment Coalition, a fair lending advocacy group.
The Trump administration moved swiftly to shut down jobs at the Consumer Protection Agency. The nearly 14-year-old division of the Federal Reserve, created in response to the 2008-09 financial crisis, has long been targeted by conservatives and the banking industry.
The court has so far suspended the White House efforts to cut the CFPB’s workforce to bone, and last week a judge asked Justice Department lawyers if “ensure that consumers are protected from abusive practices” “contradicts this administration’s policy priorities.”
“I don’t know the answer to that question,” the lawyer replied.
Benson and other supporters warn, Benson and other supporters are particularly at high risk among many proliferation services offered outside the traditional banking system. CFPB is the sole federal regulator of so-called non-bank lenders, including mobile payment apps such as Zelle, Apple Pay, Stripe, CashApp, and more.
Last week, the agency dropped a lawsuit against the three major banks that run Zelle, accusing users of mishandling fraud complaints that have led to payment app users losing more than $870 million.
“If they’re not looking for you, if you’re making sure your credit card, credit report and bank account are secure, you really need to do it yourself,” Lauren Sanders said.
Here’s what your supporters say you can do in the meantime:
Check the prices regularly
Experts say that routine scanning transactions and bank statements is simply excellent financial hygiene, but it’s even more important to have that habit right now.
“It’s about making sure there’s no surprise activity going on,” said Adam Rust, director of financial services for the advocacy group’s Consumer Federation.
This is because budget apps like EveryDollar and YNAB tally fees make it easier to track your spending. Rust also suggested hiring a financial planner for those who can afford it, or asking a local bank branch or community action agency about free or low-cost advisory services.
Experts also said that price reviews should include a setting review. For example, with Republicans set to remove the CFPB’s $5 cap at an overdraft fee, supporters say it may be a good time to change the setting that allows overdrafts for a fee. Check with your bank for the best ways to adjust your options. For example, using Chase means that customers must sign in to their account and turn off “debit card coverage.”
“Debit Card Banks advertises it as overdraft protection,” Sanders said. “Most people would prefer to be denied (charged) rather than paying a $35 fee.”
Improve account alerts
Experts advised that consumers can be vigilant during account check-in by using bank alerts. Most financial institutions allow customers to sign up for emails or text messages about credit and check transactions, said Teresa Murray, director of the consumer watchdog program for the advocacy network of the U.S. Public Interest Research Group.
“You can set up a parameter (specific) amount of the above transaction, or an out-of-state transaction,” Murray added.
Last year, the FTC tallyed more than $10 billion in victim losses due to identity theft. Services like Lifelock provide aggressive identity protection for monthly or annual fees, but Murray also notes that three major credit departments allow borrowers to freeze their credit files for free, preventing new accounts from opening in your name.
Beware of the payment app
With so many digital payment options, some experts have warned that consumer finances are more vulnerable than ever. Rust said that “using fewer services” was an easy way to limit exposure and that CFPB proposed to be “particularly cautious” about non-bank providers, the sole federal regulator.
In the last few months under then-CFPB Director Rohit Chopra, the agency stepped up scrutiny of high-tech companies that expanded to digital payments as these services were not subject to traditional banking requirements such as FDIC insurance.
Given the current administration’s approach, it may make sense to move the funds received into an FDIC insurance checking account through the payment app, Chuck Bell, program director for consumer report advocacy, noted, rather than leaving them sitting after the transaction. He also advised that you check that fund requests are from people in your contacts.
“Sometimes consumers go back to transfer all their money from their accounts because someone calls and says, ‘Your mobile phone bill is due’ or ‘I’m calling from the bank so I have to help you secure your funds’,” he said.
Shop and read detailed prints
Several supporters warned that there is a potentially unfair practice of setting car loan interest rates set by lenders and lenders set by algorithms that use bias data, that customers simply cannot catch on their own, especially when CFPB is stepping in. So it’s important to research options before signing, Bell said.
“As consumers, we are on the receiving end of a lot of marketing material, such as credit cards and bank accounts,” he said. “We tend to use these products rather than doing an extensive analysis of my options where banks charge the lowest rates. There are best rates for credit cards.”
Bell has proposed websites such as Bankrate and Nerdwallet to compare financial products from credit cards to student loans and home equity lines. He also warned against being isolated and making a big money decision.
“It’s really important to ask other people who have knowledge of fundraising,” he said. “Two or three opinions are better than one.”
Take notes and complain – to everyone
Recruiting consumer complaints was previously one of the key functions of the CFPB, which helped guide its enforcement and investigative behavior. However, some supporters are worried that the moves at the agency have already discouraged submissions, including error messages that have been temporarily displayed on the homepage in recent weeks.
“I don’t know if they’ll shut down that complaint system completely,” Sanders said. (A White House and CFPB spokesperson did not respond to requests for comment.) She said there are still many other entities to complain about, including the media, other consumer agencies such as the Federal Trade Commission, and local law enforcement agencies.
State-level officials may need to step into the gap left by the weakened CFPB, supporters say. Murray advised consumers to use the organization’s online tools to file complaints with the State Attorney General’s Office, but added that complaints should start with the company itself.
Ask questions and take notes until your service provider feels comfortable with you, allowing you to refer to previous conversations and transactions.
“You’re likely to get good results,” she said. “It’s like, ‘Oh, this guy is taking action together.’ ”
Finally, many organizations offer free or affordable legal services to consumer issues, Benson said, including legal aid and other advocacy groups like her.
“Use these resources,” she said. “If you believe you are a victim, you still have the power despite us dealing with these issues at the CFPB.”