The Consumer Financial Protection Bureau (CFPB) announced that it has finalized a rule to create a public registry of corporations that have been penalized for violating consumer protection laws.
“Too often, financial firms treat penalties for illegal activity as the cost of doing business,” said CFPB Director Rohit Chopra in the announcement. “The CFPB’s new rule will help law enforcement across the country detect and stop repeat offenders.”
The goal is to help the CFPB identify repeat offenders and recidivism by debt collectors, mortgage lenders, payday lenders, and credit reporting companies, The New York Times reported. The final rule requires covered nonbank companies to register with the CFPB when they have been caught violating consumer law, and to provide an attestation from a senior executive that the company is not flouting orders.
“Too many American families and businesses have been harmed by repeat offenders in a rinse-and-repeat cycle of illegal activity,” Chopra said at a news conference, the Times reported. “When companies believe that violating the law is more profitable than following it, this totally undermines public trust and harms businesses who are playing by the rules.”
The CPRB estimates that at least 1,500 and as many as 7,750 companies will be subject to inclusion in the registry, the Times reported. The database will compile orders from state, federal and local governments and courts against companies that have faced sanctions for lawbreaking.
Banks and credit unions will be omitted from the registry because the four federal regulators that cover that industry already publicly publish their consumer protection orders, but it may cover some bank holding companies.
The plan has been opposed by business lobbyists since it was first proposed in 2022. Six trade groups, including the U.S. Chamber of Commerce, sent a letter to the bureau last year criticizing the proposed registry as burdensome and unnecessary.
“Naming and shaming companies and their executives may win headlines and collecting consent orders may give plaintiffs’ attorneys a road map for litigation, but neither helps consumers,” the groups wrote.
Public Citizen, an advocacy group, said such a “public rap sheet for corporations” would help consumers “see if a particular company is worth the risk,” the Times reported.
Beginning in January, debt collectors, credit bureaus, and payday and mortgage lenders will be required to report, on an annual basis, agency orders and court judgments to the CFPB, and to have a senior executive affirm in writing that the company is complying.
“Including law enforcement orders from across many jurisdictions will help the CFPB ensure one-time offenders do not become repeat offenders, and that repeat offenders do not continue violating the law,” said Chopra, the Times reported.