Banking and Finance Law Daily Wrap Up, ENFORCEMENT ACTIONS—More CFPB lawsuits fall by the wayside, (May 2, 2025)

By John M. Pachkowski, J.D.

Although the Consumer Financial Protection Bureau continues to pause most of its operations, the CFPB has taken several additional steps regarding ongoing litigation.

Following its series of case dismissals at the end of February (see Banking and Finance Law Daily, Feb. 28, 2025), the Consumer Financial Protection Bureau has taken additional steps regarding enforcement actions taken prior to the change in presidential administrations.

In the case of Consumer Financial Protection Bureau v. Colony Ridge Development, LLC No. 4:23-cv-04729 (S.D. Tex. April 29, 2025), the parties jointly moved to stay all pending deadlines in the case so that the parties can engage in mediation to resolve the case. The CFPB and Justice Department brought their lawsuit against Colony Ridge alleging that the Texas-based land developer and lender setting its borrowers up to fail, targeting primarily Hispanic borrowers in financing “flood-prone land without water, sewer, or electrical infrastructure,” repurchasing the land when the borrower defaults, and reselling it to another borrower (see Banking and Finance Law Daily, Jan. 4, 2025). In the joint motion, the parties noted they “do not make this motion for purposes of delay, but for good cause” and added “[i]f mediation is unsuccessful, the parties will file a status report with the Court and an updated amended proposed scheduling order to facilitate the timely resolution of this matter.”

The CFPB and the entities comprising the National Collegiate Master Student Loan Trust have jointly stipulated to dismiss the case of Consumer Financial Protection Bureau v. National Collegiate Master Student Loan Trust et al No. 1:17-cv-01323-SB (D. Del. Apr. 25, 2025). The Bureau filed this case in 2017 alleging delinquent student loan collection practices and the parties agreed to pay more than $21.5 million to settle the charges (see Banking and Finance Law Daily, Sept. 18, 2017). Although a federal judge denied approval of the settlement, in 2020, noting that the law firm that executed the proposed consent judgment on behalf of the National Collegiate Student Loan Trusts lacked the authority to do so under trust-related agreement sand applicable law (see Banking and Finance Law Daily, June 8, 2020), the parties did reach a proposed settlement in early 2025 prior to the start of second Trump Administration (see Banking and Finance Law Daily, Jan. 17, 2025).

Another case that the Bureau seeks dismissal is Consumer Financial Protection Bureau v. Populus Financial Group Inc. No. 3:22-cv-01494 (N.D. Tex. April 30, 2025). In the underlying lawsuit, the CFPB alleged that Populus Financial Group Inc., doing business as ACE Cash Express, used tactics “designed to dupe borrowers” into rollovers and refinancing instead of free repayment plans (see Banking and Finance Law Daily, July 13, 2022).

A previously filed consent motion by the Bureau to withdraw as plaintiff in Consumer Financial Protection Bureau v. Credit Acceptance Corporation No. 1:23-cv-00038-JHR (S.D.N.Y. April 29, 2025) has been approved by the court. The CFPB and the Attorney General of the State of New York sued Credit Acceptance Corporation an auto finance lender in the subprime market, for allegedly engaging in deceptive and abusive acts or practices in violation of the Consumer Financial Protection Act of 2010 (CFPA), New York Executive Law, New York General Business Law, New York’s usury limits, and other consumer and investor protection laws (see Banking and Finance Law Daily, Jan. 5, 2023). The Bureau noted in a memorandum that “granting the Bureau’s motion would be consistent with principles of justice and fairness. This request will cause no prejudice to Defendant or the remaining Plaintiff” (see Banking and Finance Law Daily, Apr. 25, 2025).

Finally, one of the court challenges to CFPB’s January 2025 Medical Debt Rule appears headed to a dismissal, and the rule itself to be judicially vacated. In Cornerstone Credit Union League v. CFPB No. 4:25-cv-00016 (E.D. Tex. April 30, 2025), the parties moved jointly move for the entry of a consent judgment as to Counts I, II, and III of the complaint—dealing with the CFPB exceeding its statutory authority and improperly imposes additional requirements based on state law; and dismissal of all other claims in the complaint with prejudice, including those contained in Count IV—alleging that Medical Debt Rule was arbitrary and capricious. Cornerstone Credit Union League, and the other plaintiff Consumer Data Industry Association, also claimed that the Medical Debt Rule violated the First and Fifth Amendments of the U.S. Constitution by requiring debt collectors to make certain disclosures (see Banking and Finance Law Daily, Jan. 9, 2025). In their Joint Motion For Entry Of Consent Judgment, the parties noted that the Medical Debt Rule exceeded the Bureau’s authority and is contrary to law because it violates 15 U.S.C. §1681b(g) pertaining to the inclusion of a consumer’s medical debt information on their consumer report. The court ultimately approved of the parties’ motion.

Following the court filings, the advocacy group Better Markets released a statement saying, “In a shameful reversal of its position and a betrayal of the agency’s core mission, the CFPB has now teamed up with the very industry it was charged with overseeing. In the absence of this important rule, unverified and often erroneous alleged medical debts will unfortunately continue to impede consumers’ ability to access credit, employment, and even housing.” In addition, the Consumer Federation of America released a statement. Adam Rust, CFA director of financial services, said, “If they succeed in walking away from the rule, the CFPB will destabilize the financial security of the 15 million Americans with $49 billion in medical debt in collections and tilt the economy in favor of debt collectors and insurance companies. There is a price for this extremism, and if this rule is canceled, the costs will be paid by the struggling families who could face a hard choice between preserving their credit score or seeking health care.”

Companies: ACE Cash Express, Inc.; Better Markets; Colony Ridge Development, LLC; Consumer Data Industry Association; Consumer Federation of America; Cornerstone Credit Union League; Credit Acceptance Corporation; National Collegiate Master Student Loan Trust; Populus Financial Group Inc.

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