Southern District of New York Holds the CFPB Is Unconstitutionally Structured
On June 21, 2018, the United States District Court for the Southern District of New York (“Southern District”) held that Title X of the Dodd Frank Act, which established the Consumer Financial Protection Bureau (“CFPB”) as an “independent bureau” within the Federal Reserve System, is unconstitutional.
In Consumer Financial Protection Bureau v. RD Legal Funding, LLC, et al., the CFPB and The People of the State of New York, by Eric T. Schneiderman, Attorney General for the State of New York (collectively, “Plaintiffs”) alleged that the defendant entities violated the Consumer Financial Protection Act (“CFPA”) by offering cash advances to consumers awaiting payouts on settlement agreements or judgments entered in their favor, which Plaintiffs argued were actually usurious loans prohibited by state law. 2018 U.S. Dist. LEXIS 104132 (S.D.N.Y. June 21, 2018). The consumers at issue were class members in the National Football League Concussion Litigation class action, and individuals eligible for compensation from the September 11th Victim Compensation Fund of 2001.
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