[Federal Register Volume 90, Number 116 (Wednesday, June 18, 2025)]
[Proposed Rules]
[Pages 25904-25906]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-11248]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 90, No. 116 / Wednesday, June 18, 2025 /
Proposed Rules
[[Page 25904]]
CONSUMER FINANCIAL PROTECTION BUREAU
12 CFR Part 1075
[Docket No. CFPB-2025-0021]
Consumer Financial Civil Penalty Fund Rule Amendment
AGENCY: Consumer Financial Protection Bureau.
ACTION: Proposed rule; request for comment.
-----------------------------------------------------------------------
SUMMARY: The Consumer Financial Protection Bureau (Bureau or CFPB) is
proposing to amend its 2013 rule implementing the provision of the
Consumer Financial Protection Act of 2010 (CFPA or Act) that
establishes a Consumer Financial Civil Penalty Fund (Civil Penalty
Fund). Under the CFPA, the Civil Penalty Fund may be used for payments
to victims of activities subject to civil penalties; to the extent
victims cannot be located or payments are not practicable, the Bureau
may use funds for consumer education and financial literacy programs.
This proposed rule would remove references to allocating funds for
consumer education and financial literacy programs.
DATES: Comments must be received on or before July 18, 2025.
ADDRESSES: You may submit responsive information and other comments,
identified by Docket No. CFPB-2025-0021, by any of the following
methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. A brief summary of
this document will be available at https://www.regulations.gov/docket/CFPB-2025-0021.
Email: [email protected]. Include Docket
No. CFPB-2025-0021 in the subject line of the message.
Mail/Hand Delivery/Courier: Comment Intake--Consumer
Financial Civil Penalty Fund Rule Amendment, c/o Legal Division Docket
Manager, Consumer Financial Protection Bureau, 1700 G Street NW,
Washington, DC 20552.
Instructions: The Bureau encourages the early submission of
comments. All submissions should include the agency name and docket
number. Additionally, where the Bureau has asked for specific comment
on a topic, commentors should seek to highlight the topic to which its
comment is applicable. Because paper mail is subject to delay,
commenters are encouraged to submit comments electronically. In
general, all comments received will be posted without change to https://www.regulations.gov. All submissions, including attachments and other
supporting materials, will become part of the public record and subject
to public disclosure. Proprietary information or sensitive personal
information, such as account numbers or Social Security numbers, or
names of other individuals, should not be included. Submissions will
not be edited to remove any identifying or contact information.
FOR FURTHER INFORMATION CONTACT: Dave Gettler, Paralegal Specialist,
Office of Regulations at 202-435-7700. If you require this document in
an alternative electronic format, please contact
[email protected].
SUPPLEMENTARY INFORMATION:
I. Executive Summary
The Bureau is proposing to revise its 2013 rule articulating
procedures for allocations from the Civil Penalty Fund to rescind
procedures related to allocations for consumer education and financial
literacy programs. The Bureau now believes that the procedures outlined
in the rule provide neither adequate guardrails for the agency's
exercise of its discretion nor adequate transparency to the public
regarding a potentially significant expenditure.
II. Legal Authority
The CFPA established the Bureau with a mandate to regulate the
offering and provision of consumer financial products and services
under the Federal consumer financial laws. Public Law 111-203, sec.
1011(a) (2010), codified at 12 U.S.C. 5491(a). The CFPA authorizes the
Bureau, among other things, to enforce Federal consumer financial law
through judicial actions and administrative adjudication proceedings.
12 U.S.C. 5563, 5564. In those actions and proceedings, a court or the
Bureau may require a party that has violated the law to pay a civil
penalty. See, e.g., 12 U.S.C. 5565.
Section 1017(d)(1) of the CFPA establishes a separate fund in the
Federal Reserve, the ``Consumer Financial Civil Penalty Fund'' (Civil
Penalty Fund), into which the Bureau must deposit civil penalties it
collects from any person in any judicial or administrative action under
Federal consumer financial laws. 12 U.S.C. 5497(d)(1). Under the Act,
amounts in the Fund may be used ``for payments to the victims of
activities for which civil penalties have been imposed under the
Federal consumer financial laws.'' 12 U.S.C. 5497(d)(2). In addition,
``[t]o the extent that such victims cannot be located or such payments
are otherwise not practicable,'' the Bureau may use amounts in the Fund
for consumer education and financial literacy programs. Id.
The Bureau is issuing this rule pursuant to its authority under
section 1022(b)(1) of the CFPA, which authorizes the Bureau to
prescribe rules as may be necessary or appropriate to enable the Bureau
to administer and carry out the purposes and objectives of Federal
consumer financial law, 12 U.S.C. 5512(b)(1); and under section 1017(d)
of the CFPA, which establishes the Civil Penalty Fund and authorizes
the Bureau to use amounts in that Fund for payments to victims and for
consumer education and financial literacy programs.
III. Discussion of Proposal
On May 7, 2013, the Bureau published a rule (2013 Rule) that stated
its interpretation of what kinds of payments to victims are appropriate
and established procedures for allocating such funds to both victims
and to consumer education and financial literacy programs. First, it
described the roles of Bureau officials involved in managing the Civil
Penalty Fund, including by establishing the position of Civil Penalty
Fund Administrator (Fund Administrator) and providing that the Civil
Penalty Fund Governance Board--the body comprised of senior Bureau
officials established by the Director to advise on matters relating to
the Civil Penalty Fund--may advise or direct the Fund Administrator on
the administration of the Civil Penalty
[[Page 25905]]
Fund. Second, the 2013 Rule identified the category of victims who may
receive payments from the Civil Penalty Fund and set forth the amounts
they may receive. Third, the 2013 Rule established a two-stage
procedure for expending money in the Civil Penalty Fund, pursuant to
which, based on six-month periods, the Fund Administrator will first
allocate funds for payments to classes of victims and, if appropriate,
for consumer education and financial literacy programs, then designate
a payments administrator to distribute allocated funds to individual
victims in the classes to which funds have been allocated. Fourth, the
2013 Rule set forth several circumstances in which it will be deemed
impracticable to make payments to victims or to classes of victims.
Finally, the 2013 Rule required the Fund Administrator to issue regular
reports on the disposition of funds in the Civil Penalty Fund.\1\
---------------------------------------------------------------------------
\1\ The most recent report is available at https://files.consumerfinance.gov/f/documents/cfpb_financial-report-fy-2024.pdf.
---------------------------------------------------------------------------
The 2013 Rule provided limited information on how the Bureau was to
exercise its discretion to use funds in the Civil Penalty Fund for the
purpose of consumer education and financial literacy programs, should
such funds remain available after allocations to victims. The preamble
stated only that ``the Bureau has adopted criteria--not contained in
this rule--for selecting the particular consumer education or financial
literacy programs to be funded'' and referred to a page on the Bureau's
website. The regulatory text's discussion of funding consumer education
or financial literacy programs consisted, in its entirety, of two bare
recitations of the phrase ``allocating funds to consumer education and
financial literacy programs,'' \2\ one provision parroting the
statutory grant of discretionary authority to make allocations,\3\ and
two provisions clarifying the authority of the Fund Administrator with
respect to such allocations.\4\
---------------------------------------------------------------------------
\2\ 12 CFR 1075.100 (``This part also establishes procedures and
guidelines for allocating funds from the Consumer Financial Civil
Penalty Fund to classes of victims and distributing such funds to
individual victims, and for allocating funds to consumer education
and financial literacy programs.''); Sec. 1075.105(a) (``The Fund
Administrator will allocate Civil Penalty Fund funds specified in
paragraph (c) of this section to classes of victims and to consumer
education and financial literacy programs as appropriate according
to the schedule established in paragraph (b) of this section and the
guidelines established in Sec. Sec. 1075.106 and 1075.107.'')
(emphasis added).
\3\ 12 CFR 1075.107(a) (``If funds available under Sec.
1075.105(c) remain after the Fund Administrator allocates funds as
described in Sec. 1075.106(a), the Fund Administrator may allocate
those remaining funds for consumer education and financial literacy
programs.'').
\4\ 12 CFR 1075.106(d)(2) (``If, in allocating funds during a
given time period described in Sec. 1075.105(b)(2), the Fund
Administrator exercises her discretion under paragraph (d)(1) of
this section, she may allocate funds to consumer education and
financial literacy programs under 1075.107 during that time period
only to the same extent she could have absent that exercise of
discretion.''); Sec. 1075.107(b) (``The Fund Administrator shall
not have the authority to allocate funds to particular consumer
education or financial literacy programs or otherwise to select the
particular consumer education or financial literacy programs for
which allocated funds will be used.'').
---------------------------------------------------------------------------
Simultaneously with the issuance of the 2013 Rule, the Bureau also
issued a notice of proposed rulemaking seeking comment on, inter alia,
the provisions of the 2013 Rule governing allocations to consumer
education and financial literacy programs, including whether the rule
should limit the amount of remaining funds that the Fund Administrator
may allocate to consumer education and financial literacy programs.\5\
The Bureau received four comments addressing allocations of remaining
funds for consumer education and financial literacy programs. Comments
from three consumer advocacy groups encouraged the Bureau not to place
limits on these allocations. One individual commenter opposed the use
of funds for any purpose other than repayment to individuals who have
been harmed. The Bureau did not subsequently modify the 2013 Rule.
---------------------------------------------------------------------------
\5\ 78 FR 26545, 26547 (May 7, 2013).
---------------------------------------------------------------------------
In the twelve years since the 2013 Rule, the Bureau has allocated
$3,641,510,398 from the Civil Penalty Fund for payments to victims of
activities for which civil penalties have been imposed under Federal
consumer financial laws.\6\ The Bureau has exercised its discretion to
allocate funds to consumer education and financial literacy programs
with respect to a single program; allocations for that program,
amounting to $28,812,809, were made from fiscal years 2013-2016.\7\
---------------------------------------------------------------------------
\6\ Total allocations as of September 30, 2024, are available in
the Bureau's most recent financial report. https://files.consumerfinance.gov/f/documents/cfpb_financial-report-fy-2024.pdf. Subsequent allocations are listed at https://www.consumerfinance.gov/enforcement/payments-harmed-consumers/civil-penalty-fund/.
\7\ See https://files.consumerfinance.gov/f/documents/cfpb_financial-report-fy-2024.pdf.
---------------------------------------------------------------------------
The Bureau now believes that the 2013 Rule provides neither
adequate guardrails for the agency's exercise of its discretion nor
adequate transparency to the public regarding a potentially significant
expenditure. In the absence of adequate guardrails, there could be
incentives to bring enforcement actions for the purpose of aggrandizing
the operational scope of the agency. Accordingly, the Bureau proposes
to rescind those aspects of the 2013 Rule that reference the Bureau's
use of amounts in the Fund for consumer education and financial
literacy programs. The Bureau does not intend to exercise its
discretionary authority to allocate funds to consumer education and
financial literacy programs, but it does intend to consider whether
revised procedures would be appropriate to address these concerns with
respect to any future exercises of this discretionary authority.
While this proposal is exempt from the notice-and-comment
rulemaking requirements of the Administrative Procedure Act--both
because it relates to benefits, 5 U.S.C. 553(a)(2), and because it
concerns matters of agency organization, procedure, and practice, 5
U.S.C. 553(b)--the Bureau nevertheless invites interested parties to
comment.
IV. Proposed Effective Date of Final Rule
The CFPB proposes that, once issued, the final rule for this
proposed rule would be effective upon publication in the Federal
Register. The rule is procedural and not substantive and, thus, is not
subject to the 30-day delay in effective date required by 5 U.S.C.
553(d).
V. Consumer Financial Protection Act Section 1022(b)(2) Analysis
A. Overview
In developing this proposal to amend the 2013 Rule implementing the
provision of the CFPA that establishes a Civil Penalty Fund, the Bureau
has considered the potential benefits, costs, and impacts of doing so.
This proposed rule would remove references to allocating funds for
consumer education and financial literacy programs.
The CFPB is proposing this revision because it now believes that
the procedures outlined in the rule provide neither adequate guardrails
for the agency's exercise of its discretion nor adequate transparency
to the public regarding a potentially significant expenditure. In the
absence of adequate guardrails, there could be incentives to bring
enforcement actions for the purpose of aggrandizing the operational
scope of the agency.
Section 1017(d)(2) of the CFPA, implemented by the 2013 Rule,
provides that the Bureau may, at its own discretion, allocate to
consumer education and financial literacy programs any funds from the
Civil
[[Page 25906]]
Penalty Fund that remain after the Fund Administrator allocates funds
to payments to victims of activities subject to civil penalties.
This proposed rule would rescind those aspects of the 2013 Rule
that reference this discretion. The Bureau does not intend to exercise
its discretionary authority to allocate funds to consumer education and
financial literacy programs, but it does intend to consider whether
revised procedures would be appropriate to address the above enumerated
concerns for any future exercise of this discretionary authority.
The Bureau has limited information with which to precisely quantify
the costs and benefits of the proposed rule. Thus, the discussion
considers a qualitative analysis of the likely effects of the proposed
rule. The Bureau does not anticipate that this proposal would result in
any significant costs or benefits for consumers or covered persons. The
proposed rule does not impose or remove any binding legal requirements
on the public. We note also that historically, the Bureau has allocated
relatively little of the Civil Penalty Fund to consumer education and
financial literacy programs.
The Bureau seeks specific comment on the extent to which this
proposed rule would result in benefits or costs. The Bureau is
specifically interested in any comments that could model such impacts
in a quantitative and methodologically rigorous manner.
B. Potential Specific Impacts of the Proposed Rule
i. Insured Depository Institutions and Insured Credit Unions With $10
Billion or Less in Total Assets, as Described in Section 1026
The proposed revision would not impose any obligations on
depository institutions or credit unions. Moreover, the Bureau does not
expect the proposed revision to affect Bureau behavior related to
depository institutions or credit unions, including examination and
enforcement work. Therefore, the Bureau expects this proposal would not
have specific impacts on insured depository institutions and insured
credit unions with $10 billion or less in total assets. The Bureau
seeks specific comment on the accuracy of this expectation.
ii. Impact of the Proposed Rule on Access to Consumer Financial
Products and Services and on Consumers in Rural Areas
The proposed revision would not impose new costs on providers of
financial products and services. Accordingly, the Bureau does not
expect the proposed revision would impact consumer access to financial
products and services.
Similarly, the proposed revision would neither impose costs on
providers of financial products and services in rural areas nor impose
costs on consumers in rural areas. Therefore, the Bureau does not
expect the proposed revision would impact consumers in rural areas.
The Bureau seeks specific comment on the accuracy of these
expectations.
VI. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (RFA) generally requires an agency
to conduct an initial regulatory flexibility analysis (IRFA) and a
final regulatory flexibility analysis (FRFA) of any rule subject to
notice-and-comment rulemaking requirements, unless the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities.\5\ The Bureau also is subject to
certain additional procedures under the RFA involving the convening of
a panel to consult with small business representatives before proposing
a rule for which an IRFA is required.\6\
The Final Rule concerns benefits and relates solely to agency
procedure and practice and, thus, is not subject to the notice and
comment requirements of the Administrative Procedure Act. 5 U.S.C.
553(a)(2), (b). Because no notice of proposed rulemaking is required,
this rule does not require an IRFA or a FRFA pursuant to the RFA, 5
U.S.C. 601 et seq.
VII. Executive Order 12866
The Office of Information and Regulatory Affairs has determined
that this action is not a ``significant regulatory action'' under
Executive Order 12866, as amended by Executive Order 14215.
E.O. 12866 states that ``Federal agencies should promulgate only
such regulations as are required by law, are necessary to interpret the
law, or are made necessary by compelling public need, such as material
failures of private markets. . . .'' The Bureau seeks specific comment
regarding whether there is any data, and in particular methodologically
rigorous research, to indicate the existence of a market failure or
other compelling public need that would justify the retention of the
references in the 2013 Rule to allocating funds for consumer education
and financial literacy programs.
List of Subjects in 12 CFR Part 1075
Administrative practice and procedure, Authority delegations
(Government agencies), Consumer Financial Civil Penalty Fund, Consumer
protection, Organization and functions (Government agencies).
Authority and Issuance
For the reasons set forth in the preamble, the Bureau proposes to
amend 12 CFR part 1075 as set forth below:
PART 1075--CONSUMER FINANCIAL CIVIL PENALTY FUND RULE
0
1. The authority citation for part 1075 continues to read as follows:
Authority: 12 U.S.C. 5512(b)(1), 5497(d).
0
2. Section 1075.100 is amended by removing ``, and for allocating funds
to consumer education and financial literacy programs.''
0
3. Section 1075.105 is amended by, in paragraph (a), removing ``and to
consumer education and financial literacy programs.''
0
4. Section 1075.106 is amended by, in paragraph (d),
0
a. Removing ``(1''); and
0
b. Removing ``(2) If, in allocating funds during a given time period
described in Sec. 1075.105(b)(2), the Fund Administrator exercises her
discretion under paragraph (d)(1) of this section, she may allocate
funds to consumer education and financial literacy programs under
1075.107 during that time period only to the same extent she could have
absent that exercise of discretion.''
0
5. Section 1075.107 is removed and reserved.
Russell Vought,
Acting Director, Consumer Financial Protection Bureau.
[FR Doc. 2025-11248 Filed 6-17-25; 8:45 am]
BILLING CODE 4810-AM-P