The Trump Administration Has Left Consumer Protection Cases in Limbo

More than a month after the Consumer Financial Protection Bureau announced it would transfer open legal matters to the Justice Department, the agency’s remaining enforcement cases haven’t gone anywhere, agency attorneys said.

“Nothing has happened. At least, nothing has been told to us,” CFPB enforcement attorney Vanessa Buchko, who resigned on Friday, told NOTUS.

Attorneys in the CFPB’s enforcement division, which investigates and litigates violations of consumer protection laws, said they have received no communication from leadership about transferring their caseload since they were informed of the shakeup on a Nov. 20 Teams call.

Earlier that month, acting Director Russ Vought declined to request additional funding for the CFPB, leaving just weeks before the agency would run out of money. Vought submitted the funding request to the Board of Governors of the Federal Reserve on Friday, complying with a federal judge’s order, according to a court filing. The Trump administration’s efforts to dismantle the agency remain in legal limbo.

Since November, the roughly half dozen remaining active enforcement cases have remained in limbo as well.

Each case contains as many as hundreds of thousands of documents stretching multiple years of investigation and litigation that Justice Department attorneys would have to get up to speed on.

“The biggest challenge to this transfer plan is that it’s such a significant thing to move an underway litigation where there are staff who have the history of the case, and the expertise of the laws that are being enforced in the case,” a person familiar with CFPB enforcement said. “The idea that you could hand them over and walk away is foolish.”

The CFPB’s enforcement division is tasked with recouping money for consumers from companies that violated federal laws. Its investigations, which can span multiple years, often implicate scores of people who knowingly or unwittingly lost money to deceptive and illegal business practices.

For example, Buchko’s active case, filed alongside seven state attorneys general, alleges a financial services company collected exorbitant and illegal fees from customers facing financial hardship.

One concern in the agency: that the DOJ would settle or dismiss cases that come under its authority.

“The most obvious” path forward for the DOJ is to “dismiss the case when it comes to them,” Buchko said.

Those concerns stem from the long list of potential logistical challenges of transferring cases between agencies: New attorneys would have to parse through hundreds of records to get a working command of each case, even as they would possibly face tight upcoming deadlines in court; large evidentiary datasets must be moved securely; and litigants’ contracts with experts and data providers must be transferred to the DOJ.

Then there are the more slippery questions that moving legal files between agencies could raise. Attorneys may run into a host of regulatory issues sharing sensitive documents. Perhaps more concerningly, Justice Department attorneys would lack the deep expertise of CFPB enforcers’ legal interpretations and litigation strategy for each case, former CFPB attorneys said.

It’s unclear whether the CFPB can simply transfer that material to the DOJ. Because lawyers’ third-party communications with their clients are confidential, the CFPB may not be able to share internal memos that explain why attorneys chose a certain argument or filed a particular motion, according to a former enforcement attorney who worked jointly with the DOJ on joint enforcement actions.

The delay in transferring cases comes as the CFPB faces lawsuits challenging Vought’s attempts to dramatically reduce the agency’s workforce and question CFPB’s funding structure.

Last month, the U.S. Court of Appeals for the District of Columbia Circuit granted a petition by the National Treasury Employees Union, which represents CFPB staffers, to rehear its case against Vought in February. The appeals court blocked layoffs before it delivers a ruling in the case.

In November, Vought issued a memorandum arguing that the CFPB cannot request its funding from the Federal Reserve while the Fed has no profits. But Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia affirmed in an opinion days before the agency would run out of money that the CFPB must seek additional funding, adding that any alleged “lapse” is due to “the agency’s unilateral decision to abandon its obligations.”

Twenty-two Democratic state attorneys general filed their own suit last month to halt the “defunding” of the CFPB.