A federal judge in New York recently stayed the Consumer Financial Protection Agency’s enforcement action pending review of the U.S. Supreme Court’s petition for ruling. Community Financial Services of America Ltd. v. CFPB— Another case with broader implications for the CFPB’s enforcement powers.
In April 2022, the CFPB filed a lawsuit against the money transfer operator, alleging it failed to comply with a number of requirements imposed by the 2013 CFPB Regulations (Remittance Rules). The rule requires money transfer providers to disclose material pricing and timing information and to provide remedies to consumers when transfers are not properly executed. The complaint alleges that it was involved in a number of violations that led to unnecessary delays in transfers and harmed customers.
In October 2022, the company filed a motion to dismiss the action due to the Fifth Circuit Court’s ruling. Community Financial Services of America Ltd. v. CFPBdeclared that the CFPB’s funding mechanism was unconstitutional and that the appropriate remedy was the dismissal of the enforcement action. He argued that a decision on the motion to dismiss should be withheld until further notice.
In December, Judge Katherine Polk Faira granted the motion to stay, allowing the petition for arbitration and the possibility of a Supreme Court decision. CFSA vs CFPB Directly related to the problem in this case.
Judge Failla dismissed the CFPB’s arguments against stay, including concerns about efficiency and the need to enforce consumer protection laws.
