While there are many obstacles to advancing consumer protection policies at the federal level under the current administration, adopting policies at the local level is an option that is gaining traction. The Cities for Financial Empowerment Fund (CFE Fund) held a National Convening on Local Consumer Financial Protection at the Federal Reserve Bank of Chicago on July 9, 2019. Attendees included municipal officials from across the country who are already engaged in using local power to protect their residents, other cities interested in pursuing these policies, philanthropic leaders, and experienced consumer advocates.
Jonathon Mintz, President and CEO of CFE Fund and former Commissioner of the New York City Department of Consumer Affairs, kicked off the event with a conversation with Richard Cordray, the founding Director of the Consumer Financial Protection Bureau (CFPB). Several former senior staff of the CFPB participated as well.
Low-income households and communities of color are disproportionately affected by unfair and predatory financial products, services, and practices, and by municipal fees and fines policies. Some of the local consumer issues mentioned at the CFE Fund event included wage theft, elder financial abuse, fair housing, fair lending, notario fraud in immigrant communities, vehicle ticketing and towing, and student loan debt from for-profit colleges.
Four panels discussed a wide range of consumer issues and local policy solutions being used or considered, including: complaint intake and mediation; industry-specific licensing, disclosure requirements, and consumer protections and enforcement related to debt collection agencies, payday lenders and pawn brokers, income tax preparers, used car dealers, and bail bond agents; general business practice regulations on disclosures, pricing, advertising, and unfair and deceptive practices; and, zoning regulations regarding payday and title lenders and check cashers.
Cities are creating new agencies and using existing systems for new uses. For example, the City of Denver created its own consumer protection bureau and database modeled on the federal CFPB and uses its 311call center to connect residents with financial empowerment navigators who can refer people to appropriate agencies for assistance. Nashville is also expanding its 311 system to address consumer financial complaints. Cities are also creating partnerships with federal, state, and other officials for enforcement actions including fines, administrative actions, and lawsuits. Cuyahoga County, Ohio, partnered with the Ohio Attorney General, FBI, US Department of Justice, Federal Trade Commission, Postal Inspector, and local nonprofits. Chicago’s Business Affairs and Consumer Protection Department balances consumer protections with helping small businesses, such as cab drivers.
Local governments have strong motivations to help safeguard constituents’ hard-won income and assets from predatory and unfair practices, especially as local resources are increasingly scarce. I came away from the event with a lot of ideas for how Chicago could apply lessons learned and best practices from other cities’ consumer financial protection efforts to Chicago.