CFPB’s Chopra Targeted Big Tech, Banks With Political Savvy (1)

Rohit Chopra is out the door at the Consumer Financial Protection Bureau, but he left a lasting mark on the US watchdog and the industries it polices by focusing on high-profile issues like exorbitant or hidden bank fees and Big Tech’s growing role in finance.

President Donald Trump fired Chopra, the former director announced Feb. 1, and Treasury Secretary Scott Bessent is now serving as the CFPB’s acting head until Trump names a long-term replacement.

During his three-and-a-half-year tenure in the Biden administration, Chopra used the traditional regulatory and enforcement process to revamp how banks, credit reporting companies, debt collectors, and fintechs treat their customers.

But unlike his predecessors, Chopra—the third Senate-confirmed head of the CFPB since it launched in 2011—also deployed guidance documents and made frequent media appearances to help bring about changes on bank overdraft fees, credit reporting for medical debt, and other industry practices.

While that approach drew harsh criticisms from industry groups and Republican lawmakers and a slew of lawsuits, it often led to industrywide changes that will likely outlast many of the rules that the Trump administration and federal courts are expected to axe.

“What he was doing was finding a creative solution to a problem of shifting administrations and a judiciary that was increasingly hostile to consumer protection,” said Graham Steele, the former assistant Treasury secretary for financial institutions in the Biden administration.

‘Junk Fee’ Campaign

Chopra was one of former President Joe Biden’s first picks ahead of his inauguration in January 2021, signaling the importance of Biden’s campaign against “junk fees.”

Chopra consistently railed against the fees once he was confirmed to his post in September 2021, eventually spearheading rules capping credit card late fees and bank account overdraft charges.

“Chopra spent his government career unrigging the economy, and working people are better off because of it,” Sen. Elizabeth Warren (D-Mass.)—the intellectual force behind the CFPB’s creation and the ranking Democrat on the Senate Banking Committee—said in a statement to Bloomberg Law.

While the fate of those rules is uncertain amid industry litigation, the largest banks voluntarily took steps to curb and even eliminate overdraft fees—in part due to competition from fintechs but also as a result of Chopra’s public pressure.

It’s unlikely banks that cut or abolished overdraft fees will go back to charging $35 per overdraft as some had done in the past, said Adam Rust, the director of financial services at the Consumer Federation of America.

“Chopra’s CFPB showed that junk fees were more than rhetoric,” Rust said. “They’re something that affects people’s pocketbooks head-on.”

Chopra and the Biden administration took a similar tack to remove medical debt from consumer credit reports, leading to a final rule late last year.

Consumer credit reporting companies such as Equifax Inc., Experian Plc, and TransUnion had already removed all medical debt that’s been repaid—around 70% of the total—in 2022, and the next year they stopped reporting balances in debt collection under $500.

Now that the CFPB’s rule is in place and subject to two industry lawsuits, courts may end up striking it down. But it’s unlikely credit reporting companies will go back on the medical debt changes they already made, said Alan Kaplinsky, senior counsel at Ballard Spahr LLP and former leader of the firm’s consumer financial services group.

Setting Guidelines

Chopra relied on various guidance documents and major enforcement actions—such as a $3.7 billion settlement with Wells Fargo & Co. in December 2022 and lawsuits in recent months against JPMorgan Chase & Co., Bank of America Corp., Wells Fargo, and Experian—to shape the regulatory landscape, spurring changes that will likely survive his departure from the CFPB.

Companies ran to their lawyers, for instance, after Chopra’s CFPB released a circular last June stating that any contract terms violating state laws were a violation of federal law, Kaplinsky said.

“A lot of our clients have done a very thorough review of their contracts to try to clean them up,” he said.

The CFPB under Chopra also issued unilateral guidance, interpretive rules, advisory opinions, and exam-manual changes on issues such as medical debt, anti-discrimination enforcement, and credit protections for buy now, pay later products.

The Trump administration is expected to repeal all of Chopra’s guidance, demonstrating the limitations of shaping industry through nonbinding documents, said Mike Silver, a Husch Blackwell LLP partner.

“Relying on a tool like guidance as your primary tool is risky from an administrative law perspective,” Silver, a former CFPB regulatory attorney, said.

But the agency last month outlined how blue-state attorneys general and financial regulators can use those documents in court.

And, with a flurry of proposals ahead of the Trump transition, Chopra set the stage for a future Democratic-led CFPB.

“He’s making it very easy for a successor appointed by a Democratic president to pick up where he left off,” Kaplinsky said.

‘Into the Future’

The CFPB under Chopra also looked to bring more scrutiny to tech heavyweights offering consumer financial products.

In addition to applying some credit card requirements to buy now, pay later companies using an interpretive rule, Chopra also expanded the CFPB’s supervision to include digital payment platforms run by Apple Inc., Meta Platforms Inc.'s Facebook, and Alphabet Inc.'s Google.

Both rules are subject to litigation, but Chopra managed to expand the agency’s footprint by focusing on fintech and Big Tech, said Rachel Rodman, a White & Case LLP partner.

The CFPB’s rules making it easier for US banking customers to access their data is another example of Chopra moving the CFPB forward, she added.

Those “open banking” rules, mandated by the 2010 Dodd-Frank Act, also face a lawsuit from banks, but they likely will have staying power, said Rodman, a former top CFPB attorney.

“Chopra has taken the agency into the future,” she said.