A change in presidential administration often brings shifts in the CFPB’s rulemaking and enforcement priorities. Rules in various stages of development—final, proposed, or pre-rule—can be paused, reviewed, or even revised. These changes can make the regulatory landscape feel like a pendulum swinging with the political tide. For instance, in early 2021, the CFPB was predicted to adopt a notably more aggressive stance on rulemaking, supervision, and enforcement compared to the prior administration, which had minimal rulemaking activity and symbolic penalties. This shift proved accurate and impactful.
Similarly, as we enter 2025, the pendulum may swing again.
Before diving into specific rules that could be affected, it’s important to understand the Congressional Review Act (CRA), a tool Congress can use to pause or overturn agency rules within 60 legislative days of their publication in the Federal Register. This mechanism could halt certain CFPB initiatives. In recent years, Republican lawmakers have criticized the CFPB’s approach to rules, particularly those targeting what the agency calls “junk fees.”
Recent CFPB Rules That Could Be Affected
In December 2024, the CFPB released its semiannual rulemaking agenda, highlighting rules in various stages of development. Below are some of the key rules that may impact fintechs, along with insights on their potential trajectories under the new administration.
Overdraft Rules
On December 12, 2024, the CFPB issued a final rule addressing overdraft practices, applicable to banks with over $10 billion in assets. While this threshold primarily targets large institutions, it also captures some community and regional banks. The rule introduces two major requirements:
- Overdrafts are treated as credit, making them subject to TILA and its implementing Regulation Z.
- Repayment options must include at least one non-electronic method, prohibiting institutions from mandating electronic payments.
Exceptions exist if the overdraft fee aligns with the institution’s costs and losses or is capped at $5. Previously, overdrafts were exempt from TILA and Regulation Z, and banks could require repayment via preauthorized electronic transfers. This rule aims to close those loopholes.
NSF Fees for Instantly Declined Transactions
In January 2024, the CFPB proposed a rule prohibiting NSF fees for transactions declined in real time, classifying such fees as unlawful. Critics have questioned the necessity of this rule, as the CFPB itself noted that this practice is rare. Although the rule was slated for finalization by December 2024, it remains unpublished.
Both of the above rules reflect the CFPB’s focus on eliminating junk fees.
Remittance Transfers
This rule proposes revisions to consumer disclosures for remittance transfers, clarifying that inquiries and complaints should be directed to the remittance company rather than the CFPB. This change could reduce formal complaints routed through the CFPB, allowing institutions to handle routine consumer issues more efficiently. The rule is in its final stage, with an anticipated finalization date of March 2025.
Defining Larger Participants in Digital Payment Applications
On November 21, 2024, the CFPB finalized a rule defining “larger participants” in the general-use digital consumer payment applications market. These entities, facilitating at least 50 million consumer transactions annually, will now fall under the CFPB’s supervisory authority. This threshold is significantly higher than the 5 million transactions proposed initially, reducing the rule’s scope. By establishing regulatory parity between banks and nonbanks, this rule aims to level the playing field.
Proposed Rule: Protecting Consumer Information
Issued on December 4, 2024, this proposed rule seeks to regulate data brokers similarly to credit bureaus and background check companies. Key provisions include protecting consumer identifiers, requiring explicit consent for data sharing, and maintaining access for legitimate government purposes. The rule targets data brokers, a segment increasingly scrutinized for facilitating fraud and privacy violations. This proposed rule is part of a broader government-wide initiative to protect Americans’ sensitive personal data.
Pre-Rule Initiatives in Mortgage Servicing
Also, for those financial institutions and Fintechs that participate in the residential mortgage industry, there are two pre-rule initiatives addressing mortgage servicing and customer service. While both may face delays, the customer service rule—addressing AI and technology—might have a stronger chance of survival, given its alignment with current technological trends.
What to Expect in 2025
It’s difficult for us to predict which of these rules will ultimately survive the new administration. Rules that improve clarity, such as those on remittance disclosures, or those fostering regulatory equity, like the larger participants rule, may persist. The proposed rule targeting data brokers, given its alignment with fraud prevention, also has a reasonable chance of advancement. However, rules targeting junk fees, such as the overdraft and NSF fee regulations, may be rolled back.
These regulatory pendulum swings are a familiar challenge for compliance officers. Staying informed through industry publications and webinars—especially in late January and early February 2025—will be crucial for navigating these changes.
