FTC, CFPB Sorting Out Respective Roles in Reducing Financial Fraud
September 15, 2011
Just seven weeks after the new Consumer Financial Protection Bureau opened its
doors, the Federal Trade Commission shows no signs of ceding any of its own
overlapping jurisdiction over financial fraud. The agency recently brought suit
against a payday lender that allegedly tried to garnish consumers' wages without
obtaining the required court order. Earlier this month, the FTC also amended its
complaint against U.S. Mortgage Funding, charging the company with falsely
promising financially strapped consumers that they would get loan modifications
to make their mortgages more affordable. Meanwhile, the CFPB is still gearing up
and has yet to issue a single enforcement action. It is unclear how the two
agencies will split up the responsibility. "The FTC and the CFPB will have joint
enforcement over deceptive marketing of payday loans and a range of other
financial products," according to FTC spokeswoman Betsy Lordan, who said details
on how the agencies will split joint enforcement efforts will be made clear in a
Memorandum of Understanding, set to be complete by Jan. 21, 2012. But one FTC
commissioner, J. Thomas Rosch, has challenged why the CFPB is even necessary, as
the two agencies have so much overlapping jurisdiction. "The proposed new agency
has no track record in protection consumers from deceptive and unfair practices
in the financial marketplace," he said.
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