The FTA Won. Consumers Lost. Nobody's Coming.

The FTA supports the CFPB’s stated purpose in ensuring that consumers are provided the necessary disclosures to ensure than an informed decision can be made and, perhaps, even more noble..the desire to safeguard consumers against inaccurate and unfair billing practices. A bold opening move by the FTA: echoing support for a position that would likely receive an approval rating in the high ninetieth-percentile, even in these polarizing, political times.

Now that we’ve disposed of the formalities, let’s pivot to the real issue in this matter: as even the best of intentions can result in unintended and unexpected consequences, the CFPB is required to adhere to the samed “bounds of the law” as any other law-abiding entity or sentient being. Especially, since the agency has almost supernatural powers, as evidenced by the fact that only four similarly-comprised agencies existed before its inception. Interestingly, here are the most relevant:

Clearly the CFPB harnesses its’ powers to strike often and indiscriminately in the name of whatever the FTA considers outside the “bounds of the law” and “significant.” From their incisive prose, I have ascertained that the FTA assesses the CFPB’s actions as impacting “financial service providers and consumers in significant ways.” The FTA naturally doesn’t expound on their definition of “significant” because their premise is clearly followed logically by the equally amorphous statement that this significance necessitates absolute adherence to the Administrative Procedure Act. The APA was enacted in 1946 as a reaction to the liberally-construed Chevron reasonable standard test which allowed agencies to act with virtually no oversight. I’m all for precedent but in the 75+ years since its’ inception, the times have indeed changed, and Stare Decisis insofar as this matter is an irrelevant line of inquiry.

For reasons known only by FTA’s counsel, and perhaps every other person to either hear the record or read the transcripts of this dispute, the FTA is an ardent supporter of the CFPB’s directive to improve informed decision-making and consumer protections regarding billing disputes. I’m sure every BNPL ensures one of its’ values incorporates that exact sentiment. But BNPL’s aren’t charities and they won’t suffer any inequities. Added disclosure costs from more regulation is simply more than these organizations can bear. Their position espouses a corporate mindset that is tragically sad and satirically trite.

Which is tragically sad and sadly predictable given the APA’s well-documented history of keeping the agencies of the executive branch on a tight leash. And as Counsel references, the “vast authority” another Court described the CFPB of possessing is unassailably supported by the historical record. The small minority of similarly-formed agencies mentioned above apparently have authority FTA might characterize as insignificant compared to the CFPB and these agencies respective practices are firm reminders that the APA is the last line of defense concerning issues of executive overreach:

For example, the SSA follows two internal manuals (POMS and HELIX) for claims processing and litigation, and both are classified as binding because the SSA has so declared. Seems as if the APA isn’t quite the tip of the regulatory spear despite the earlier referenced misconceptions.

Should a dispute pass this first threshold, and a claimant seek redress from an Administrative Law Judge, they’re quickly made aware that the SSA and ALJ’s share identical views on the weight of these manuals and the instructive, advisory nature of the APA. Let me do a better job of explaining the reality of this conduct. Because the first two observations illustrate the position disabled claimant’s find themselves in after hearing a benefit calculation has reduced their benefits. A claimant can’t assert a right to review or comment on a now-binding rule as that right has already been bargained away by colluding parties.

If the APA was intended to alleviate harms from Chevron’s exceptionally low standard for scrutinizing regulations, it fell arguably shorter from the mark than the FTA’s fiery opening systematically destructing any argument supporting APA applicability to BNPL’s.

I’m sure it was passed with the best of intentions but the fact is that most view it as an inconvenient formality. I had the privilege of attending several review and comment sessions concerning proposed state housing agency updates on the application process for low-income housing tax credits. And there was actually a decent-sized crowd, with prospective tenants and property developers represented proportionately. And yet, disabled complaints are left in the dark as their primary income source is reduced imposing further stress.

The APA has two particular interesting sections:

I presume a coin flip determines which party’s interpretation of arbitrary and capricious will apply.

Why, exactly, are BNPL’s up in arms about the compliance costs to add a clause or extra sentence to clickwrap already in place? I suppose it’s because BNPL’s consider themselves as entitled to legislative favors because of their selfless efforts in leading the technological revolution which will improve quality of life for all demographic extents, provided their software doesn't do something unexpected and release personally sensitive information or come disastrously close to becoming a national security threat. Wait; that's happened.

Despite your economic novelty, your business models are near identical and appear completely blind to the compounding effect that debt stacking, phantom loans, proactive recitation and eventual regulatory oversight will have in sustained margin losses, fixed costs, and whatever.

My perspective on the utility of the CFPB should be clear by now. Something for the windbags. A federal judge recently ruled against them for fast-tracking a settlement with a telecommunications provider involving settlement charges. In his self-righteous opinion, he criticizes their supposed abandonment of consumer interests arguing that the amount clearly is a disservice to consumers because…crickets. So, here you have a feckless CFB, and a grandstanding justice proposing…what exactly? That the CFPB summarily make consumers co-plaintiffs, and lobby to engage a firm like Morgan Shrew to bring the house down? Complete clown show.

Enter congress, and proposing and passing H.J. Res. 195 to allow it to rapidly reverse an agency rule with a majority vote. Which, in layman’s terms, is yet another arrow in the quiver of our elected representatives whose thirst for power can never be quenched. Because a federal agency with one executive is a dictatorship but a congressional majority constantly searching for ways to expand its’ power over the other branches is what…a socialist utopia?

And with the only temporarily undefined variable constrained to move in either of two directions for a short period of time until it moves in the opposite direction, ensuring for the most part that any progress or regress depending on perspective will organically neutralize any substantive changes to the status quo. Power, money and influence are now the core characteristics of Western Democracy, and while the players change, the results never do.