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Nessel Fights to Preserve Consumer Protections

LANSING – Michigan Attorney General Dana Nessel recently joined 23 other attorneys general in filing an amicus brief arguing that the U.S Supreme Court should preserve consumer protections provided under Title X of the Dodd-Frank Act, which includes the Consumer Financial Protection Bureau (CFPB) and other tools the states use to combat fraud and abusive practices.

“The Consumer Financial Protection Bureau was specifically designed to provide consumers with information to make sound financial decisions,” said Nessel. “My colleagues and I cannot sit idly by when there is a threat against essential consumer protections.”

In 2017, the CFPB began an investigation into the California law firm Seila Law for its debt-relief practices. Seila Law attempted to block the investigation, arguing that the CFPB is unconstitutionally structured because the director may only be terminated by the president for insufficient office conduct. According to Seila Law, this removal provision infringes on the president’s executive power and violates the Constitution’s separation of powers clause. The U.S. District Court for the Central District of California and the U.S. Court of Appeals for the Ninth Circuit both rejected Seila Law’s arguments and upheld the constitutionality of the CFPB.

Seila Law has now appealed to the U.S. Supreme Court, again arguing that the CFPB is unconstitutional and that the entirety of Title X of the Dodd-Frank Act must be struck down.

Under the Trump administration, the CFPB has changed its position and now agrees with Seila Law that the removal provision violates the separation of powers clause, although the agency argues that the rest of Title X can survive even if the provision is invalid.

In their brief, the attorneys general argue that the CFPB’s structure is constitutional and that — even if the removal provision is invalid — the CFPB and the rest of Title X should survive. The brief highlights the many ways that the states have worked cooperatively with the CFPB to root out fraud and abusive consumer practices in the market, including joint enforcement actions and information sharing. The brief also highlights the various provisions of Title X that are unrelated to the CFPB, but still give the states powerful tools to fight fraud and abusive practices such as prohibiting exclusive payment networks and routing restrictions for debit cards.

Attorney General Nessel joins the attorneys general of California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington and Wisconsin in filing this brief.

A copy of the amicus brief is available here.