Taskforce Trouble: NACA and Other Consumer Advocates Sue the CFPB

Yesterday, several consumer advocate groups sued the Consumer Financial Protection Bureau (CFPB) and Director Kathy Kraninger about the CFPB's Taskforce assigned to review consumer financial laws and provide recommendations for improvement to the Director. According to the consumer advocates—including the National Association of Consumer Advocactes, the United States Public Research Group, and Kathleen Engel, who is a professor at Suffolk University—Taskforce is biased toward the industry. The lawsuit seeks to enjoin the Taskforce from continuing its work, make its records publicly-available, and to set aside its charter.

According to the 52-page complaint:

[D]espite the profound implications of the Taskforce’s work for consumer protections, Defendants have appointed to the Taskforce individuals who uniformly represent industry views. Indeed, the Chairman of the Taskforce, Todd Zywicki, believes that consumer protections are paternalistic, has argued that the CFPB is a “menace” “guarantee[d]” to manifest “bureaucratic pathologies,” and has worked on behalf of several large financial institutions to influence the Bureau and other agencies. All of his fellow Taskforce members have either expressed similar views or continue to work as industry consultants or lawyers.

The complaint notes the Taskforce's lack of representation from consumer advocates should cause concern, as they will result in biased recommendations:

In the absence of any consumer representation on the Taskforce, and without the legally required public participation and transparency, consumer advocates and consumer finance law experts like Plaintiffs have been unable to participate in or follow along with the Taskforce’s work. These flagrant and ongoing violations continue to injure Plaintiffs and are of great concern, as the Taskforce has already begun working towards producing a final report due in January 2021.

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The consumer advocates argue that the biased composition of the Taskforce violate the Federal Advisory Committee Act (FACA), which, according to the complaint, "is a “sunshine law” designed to prevent special interest groups from exerting undue influence over the Executive Branch by using their membership on advisory committees to promote their private concerns."

The Taskforce was initially announced back in October 2019, when the CFPB put a call out for applications for experts in the field. The Taskforce members were announced in January 2020, including the announcement that Zywicki would chair the group. In March, the Taskforce requested input through a Request for Information to help focus its mission.