New York District Court Finds CFPB Unconstitutional
The federal district court for the Southern District of New York dismissed the Consumer Finance Protection Bureau (“CFPB”) from a lawsuit brought by it and the New York Attorney General. The suit involves companies that offered cash advances to consumers awaiting payouts from settlement agreements that were allegedly usurious loans in violation of New York law. The court found the CFPB’s structure unconstitutional, therefore it lacked the authority to bring claims under the Consumer Finance Protection Act (“CFPA”). This is the latest development in the partisan fight over the power and existence of the CFPB and its single director and board structure. This decision is contrary to the D.C. Circuit’s ruling earlier this year that the CFPB structure is constitutional. The case will proceed through the New York Attorney General who the court held has the authority to bring the CFPA claim. No word yet on whether the CFPB will appeal.