The Dodd-Frank Act (“Dodd-Frank”) granted to state attorneys general and state regulators much of the Consumer Financial Protection Bureau’s (“CFPB”) UDAAP authority. In particular, Dodd-Frank gives state attorneys authority to enforce the UDAAP prohibition in the Consumer Financial Protection Act (“CFPA”) against non-banks and state-chartered financial institutions under their jurisdiction, as well as CFPB regulations that affect such institutions. Dodd-Frank also authorizes state regulators to bring UDAAP claims (and claims under CFPB-issued regulations) against any entity that is state-chartered, incorporated, licensed, or otherwise authorized to do business under state law. The remedies available under the CFPA are significantly more robust than the remedies otherwise available to many state regulators.
A series of recent settlement activity suggests an increase in state enforcement under Dodd-Frank’s state action provisions.
Other state enforcement actions are pending, including (1) a federal lawsuit by the Illinois Attorney General involving allegations that a lender offered an unfair revolving line of credit and engages in unfair, abusive, and deceptive practices in connection with that product; and (2) a federal lawsuit brought by the Florida and Connecticut Attorneys General under their authority to enforce the federal Mortgage Assistance Relief Services Rule and Florida and Connecticut laws prohibiting deceptive and unfair trade practices, based on an alleged mortgage rescue scam. State of Illinois v. CMK Investments, All Credit Lenders, United States District Court for the Northern District of Illinois; State of Florida, State of Connecticut v. Berger Law Group, United States District Court for the Middle District of Florida.