U.S. Supreme Court Takes Up Case Involving Constitutionality of Funding for Consumer Financial Protection Bureau (CFPB)
The Supreme Court of the United States (SCOTUS) has agreed to take up a case that involves the constitutionality of funding for the Consumer Financial Protection Bureau (CFPB) after a federal appeals court ruled in October 2022 that the funding for the CFPB violates the U.S. Constitution, according to a SCOTUSblog News article posted on February 27, 2023.
Consumer Financial Protection Bureau v. Community Financial Services Association of America, Limited – which began as a challenge by the payday-lending industry – involves the issue of whether the court of appeals was mistaken in holding that the statute providing funding to the CFPB violates the appropriations clause in Article I, Section 9 of the Constitution.
“A three-judge panel of the U.S. Court of Appeals for the 5th Circuit rejected most of the groups’ challenges to the rule, but it ultimately struck down the rule based on the CFPB’s unique funding scheme, which operates outside the normal congressional appropriations process,” explained the SCOTUSblog article written by Independent Contractor and Reporter Amy Howe.
“The CFPB receives funding directly from the Federal Reserve, which collects fees from member banks. And that scheme, the court of appeals concluded, violates the Constitution’s appropriations clause, which directs that ‘[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law,’” according to the SCOTUSblog article.
The CFPB asked the Supreme Court to take up the case and overrule the lower court’s “unprecedented and erroneous understanding of the Appropriations Clause” because the ruling “calls into question virtually every action the CFPB has taken in the 12 years since it was created.” The case likely will be argued in the Fall of 2023 with a decision sometime in 2024.
The CFPB was created in 2010 by the “Dodd-Frank Wall Street Reform and Consumer Protection Act” and has the authority to take action against institutions violating consumer financial laws, including the federal Fair Credit Reporting Act (FCRA) that protects consumers from the inclusion of inaccurate information about themselves in background check reports.
ClearStar is a leading global Human Resource technology company specializing in background checks, drug testing, and occupational health screening. ClearStar offers employment background checks that comply with the CFPB and FCRA to help employers make informed hiring decisions. To learn more about background checks, contact ClearStar.
© 2023 ClearStar. All rights reserved. – Making copies of or using any part of the ClearStar website for any purpose is prohibited unless written authorization is first obtained from ClearStar. ClearStar does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.
Let's start a conversation
At ClearStar, we are committed to your success. An important part of your employment screening program involves compliance with various laws and regulations, which is why we are providing information regarding screening requirements in certain countries, region, etc. While we are happy to provide you with this information, it is your responsibility to comply with applicable laws and to understand how such information pertains to your employment screening program. The foregoing information is not offered as legal advice but is instead offered for informational purposes. ClearStar is not a law firm and does not offer legal advice and this communication does not form an attorney client relationship. The foregoing information is therefore not intended as a substitute for the legal advice of a lawyer knowledgeable of the user’s individual circumstances or to provide legal advice. ClearStar makes no assurances regarding the accuracy, completeness, or utility of the information contained in this publication. Legislative, regulatory and case law developments regularly impact on general research and this area is evolving rapidly. ClearStar expressly disclaim any warranties or responsibility or damages associated with or arising out of the information provided herein.
