00:00Today on Forbes, How Trump's Hatchet Man is Destroying Consumer Protections
00:05Two years ago, the Consumer Financial Protection Bureau, or CFPB, a federal financial regulatory
00:13agency, announced it was forcing Toyota Motor Credit to give consumers back tens of millions
00:19of dollars. In a press release citing consumers' complaints, the CFPB said that while selling
00:24bundled auto insurance and car servicing products, Toyota dealers had quote, lied about whether
00:30these products were mandatory, and sneakily included them in contracts without borrowers
00:35knowing it. Even more maddening, when consumers called Toyota to cancel the unwanted add-ons,
00:42representatives had been trained to keep promoting the products until the customer asked to cancel
00:46three times. Then customers still couldn't cancel during those calls. They had to take yet another
00:52step and submit a written request. Between 2016 and 2021, Toyota funneled 118,000 calls
01:00to this hotline. In 2023, the CFPB ordered the company to give customers back $48 million and
01:07pay a $12 million fine for these and other violations. But earlier this year, the Trump
01:14administration, in its quest to roll back financial regulation, erased that ruling, terminating
01:20Toyota's obligation to pay consumers the $48 million. The same thing happened to a CFPB settlement
01:26with large credit union Navy Federal. The financial institution had agreed to give $80 million back
01:32to consumers for improperly charging overdraft fees while customers, including active duty service
01:38members and veterans, showed a positive balance at the time of their transactions, an order that has
01:43since been reversed. In permanently dismissing 22 CFPB enforcement actions, the Trump administration
01:50has caused at least $120 million due to be paid to consumers to stay in companies' pockets.
01:57And if the current administration continues canceling CFPB orders, another $240 million slated to be paid
02:04out might not reach consumers either, according to not-for-profit consumer advocacy groups,
02:09the Consumer Federation of America, and protect borrowers. At the urging of Trump nemesis
02:15Senator Elizabeth Warren, Congress created the CFPB after the financial crisis as part of the
02:21Dodd-Frank Act, which President Obama signed into law in 2010. The agency was tasked with enforcing
02:28financial laws, making regulatory rules, and supervising financial services companies, especially
02:34non-banks, since they often fell in the gaps between banking and securities regulators.
02:40Since its creation, the CFPB has ordered companies to provide $20 billion in relief payments
02:46to 195 million consumers and to pay $5 billion in fines. The Trump administration has brought nearly
02:54all of that activity to a halt. This year, the CFPB will likely bring the lowest number of enforcement
03:01actions since its inception. And Russell Vogt, the Director of the Office of Management and Budget
03:06and Acting Head of the CFPB, recently said he aims to shut the entire agency down in two to three
03:12months. Eric Halperin, the CFPB's former enforcement director, who left the agency in February, says,
03:20quote,
03:20Never before in the CFPB's short history have we seen such an almost complete abandonment of its
03:26obligations under the law. Vogt's moves are part of a broader plan to dramatically shrink the size of
03:33the government. He seems to view the CFPB as duplicative of other regulatory agencies and
03:38hostile toward businesses. Rohit Chopra, the head of the CFPB under President Biden, was often
03:45criticized by industry executives and accused of bringing enforcement actions that went beyond the
03:50CFPB's legal scope of power. But former regulators and financial services executives Forbes spoke with
03:56for this story all believe that killing off the CFPB will do more harm than good. The short-term
04:03winners from the regulatory pullback are numerous. They include megabanks like JPMorgan Chase, Bank of
04:09America, and Wells Fargo that saw a major lawsuit against them dismissed. The suit accused the banks
04:15and early warning services of not doing enough to prevent hundreds of millions of dollars of fraud
04:20on Zelle, the money transfer app they co-own and operate. Last December, Zelle called the suit,
04:27quote, meritless. The big three credit bureaus, Equifax, Experian, and TransUnion, now have lighter
04:34oversight by a CFPB that has fined them in the past for not doing enough to fix errors on consumers'
04:40credit and tenant screening reports. And non-banks and fintechs, big and small, that aren't under the
04:45purview of other federal regulators, will now likely feel less pressure to comply with the law.
04:51Financial institutions have clearly gotten the message that there are fewer cops on the regulatory
04:56beat. For full coverage, check out Jeff Coughlin's piece on Forbes.com. This is Kieran Meadows from Forbes.
05:05Thanks for tuning in.
05:15Thanks for tuning in.
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