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Jul 24, 2025

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Public Comment on the Consumer Financial Civil Penalty Fund Rule Amendment

by | Jul 24, 2025

Consumer Protections, Equity work, federal action, News

Consumer rights and consumer protection, business law concept : Shopping basket, shopping bags and a shopping cart on a laptop computer with judge gavel, balance sale of justice and bookshelf behind.

The following public comment was submitted by Chris Nelson on behalf of CCLP on July 18, 2025 to the Consumer Financial Protection Bureau, regarding a proposed Consumer Financial Civil Penalty Fund Rule Amendment. For more information see the proposed rule on the Federal Register.

Dear Acting Director Vought:

The Colorado Center on Law & Policy (CCLP) is submitting these comments opposing the Consumer Financial Protection Bureau’s proposed rule amending 12 CFR Part 1075 to eliminate references to consumer education and financial literacy programs from the Civil Penalty Fund regulations.[1] Specifically, the proposed rule would remove language from sections 1075.100, 1075.105, and 1075.106, and eliminate section 1075.107 entirely—effectively stripping the Bureau of its congressionally granted discretionary authority to allocate Civil Penalty Fund resources to consumer education and financial literacy programs when direct victim compensation is not practicable.[2] This proposed change contradicts congressional intent, undermines free market principles, and represents regulatory overreach that exceeds the Bureau’s authority following recent Supreme Court precedent.

Congressional Intent and Statutory Authority

The Consumer Financial Protection Act (CFPA) establishes the CFPB “with a mandate to regulate the offering and provision of consumer financial products and services under the Federal consumer financial laws.”[3] Congress granted the Bureau broad rulemaking authority under Section 1022(b)(1) to “prescribe rules as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of Federal consumer financial law.”[4] Critically, the CFPA explicitly grants the Bureau discretionary authority under Section 1017(d)(2) to allocate Civil Penalty Fund resources to consumer education and financial literacy programs when direct victim compensation is not practicable.[5] This statutory language is unambiguous, and under Loper Bright Enterprises v. Raimondo, courts must determine the best interpretation of clear statutory text rather than deferring to agency interpretations, making any administrative attempt to eliminate this congressionally- granted discretionary power contrary to clear congressional intent.[6] Consumer education and financial literacy programs directly support these congressionally mandated objectives by preventing future violations and protecting consumers from harmful practices.[7]

The Bureau argues it lacks “adequate guardrails” for exercising discretion over consumer education funding and cites transparency concerns.[8] However, these arguments conflate administrative choices with statutory authority. Congress has the authority to grant discretionary power to agencies and does so regularly without requiring them to abandon that power due to internal procedural concerns. Congress specifically contemplated scenarios where funds would remain after victim compensation and provided a constructive mechanism for their use. If the Bureau desires additional procedural safeguards or greater transparency, it should establish them through improved reporting and oversight mechanisms, as well as rulemaking that follows notice and comment procedures, rather than eliminating this fundamental authority granted by Congress. By eliminating this authority entirely, the Bureau substitutes its current policy preferences for Congress’s explicit statutory design, directly contravening its mandate to “carry out the purposes and objectives of Federal consumer financial law.”[9]

Free Market Principles and Consumer Education

For free markets to function properly, both parties involved in a transaction must have enough information to determine whether the transaction maximizes their individual utility—the economic satisfaction or benefit derived from consuming goods or services.[10] In economic theory, informed consumer choice is fundamental to market efficiency, as consumers can only maximize their utility when they have sufficient information to evaluate the true costs, benefits, and risks associated with financial products.[11] Research consistently demonstrates that financial education programs help consumers develop the knowledge and skills necessary to prevent predatory practices, build financial stability, and make informed decisions about financial products and services.

The Congressional Research Service notes that the CFPB was created specifically because “consumer financial regulatory powers were strengthened and consolidated in a single regulator with a consumer-centric mission” due to widespread market failures in consumer financial services.[12] Consumer education programs effectively address these documented market failures by reducing information asymmetries between complex financial institutions and individual consumers and preventing future violations—precisely the type of market failure that Executive Order 12866 recognizes as justifying regulatory intervention.[13] The Bureau specifically requests comment on whether market failures justify retaining consumer education authority under this standard[14], yet by removing the CFPB’s authority to fund consumer education and financial literacy programs through the Civil Penalty Fund, this proposed rule eliminates a vital resource for ensuring that consumers have access to the information they need to make informed financial decisions. This undermines the market efficiency that well-functioning consumer financial markets rely on.

Conclusion

The proposed rule contradicts clear congressional intent, undermines free market principles, and violates recently established standards for agency interpretation of statutory authority. Rather than eliminating this valuable consumer protection tool, the Bureau should strengthen its implementation while preserving the authority Congress deliberately granted. The discretionary language in Section 1017(d)(2) grants authority that should be exercised responsibly rather than abandoned entirely, particularly given the demonstrated need for consumer education. We respectfully request that the Bureau withdraw this proposed rule and instead focus on improving the implementation of existing statutory authority for consumer education programs.

Sincerely,

Chris Nelson
Research & Policy Analyst
Colorado Center on Law and Policy

**********

[1] Consumer Financial Civil Penalty Fund Rule Amendment, 90 Fed. Reg. 25904 (June 18, 2025) (Docket No. CFPB–2025–0021).

[2] Id. at 25906.

[3] 12 U.S.C. § 5491(a); Pub. L. 111-203, sec. 1011(a) (2010).

[4] 12 U.S.C. § 5512(b)(1).

[5] 12 U.S.C. § 5497(d)(2).

[6] Colorado Center on Law and Policy, Life after Chevron Issue Brief, at 5 (Apr. 2, 2025).

[7] See Congressional Research Service, The Dodd-Frank Wall Street Reform and Consumer Protection Act: Background and Summary, R41350, at 16-17 (Apr. 21, 2017) (noting the CFPB’s “consumer-centric mission” and authority “to prohibit unfair, deceptive, and abusive acts or practices associated with consumer financial products and services”); 12 U.S.C. § 5531.

[8] Consumer Financial Civil Penalty Fund Rule Amendment, 90 Fed. Reg. at 25905.

[9] 12 U.S.C. § 5512(b)(1).

[10] MIT OpenCourseWare, “Principles of Microeconomics Recitation Text,” at 290, available at https://ocw.mit.edu/ans7870/14/14.01SC/MIT14_01SCF11_rttext.pdf.

[11] See Hal R. Varian, “Consumer Choice,” in Microeconomic Analysis (3rd ed., New York: W.W. Norton & Company, 1992).

[12] Congressional Research Service, supra note 6, at 16.

[13] Exec. Order No. 12866, 58 Fed. Reg. 51735 (Oct. 4, 1993).

[14] Id. at 25906.

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HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

Health First Colorado is the name given to Colorado’s Medicaid program. Medicaid provides public, low-cost health insurance to qualifying adults and children. It is an entitlement program funded by the federal, state, and county governments and is administered by counties in Colorado. Those who are required to pay must pay a small co-pay when receiving certain health care services.

State Department: Department of Health Care Policy and Financing

Eligibility: Most adults 18 to 64 are eligible for Medicaid in Colorado if their household income is at or below 133% of the federal poverty limit (FPL). Pregnant women are eligible with incomes of up to 195% FPL, while children under 18 may be eligible if the live in a household with income at or below 142% FPL. Some adults over 65 may also be eligible for Medicaid.

Program Benefits: Through Medicaid, low-income Coloradans are eligible for a range of health care services at little to not cost. Services provided include doctors visits, prescription drugs, mental health services, and dental care. Co-pays for certain individuals may be needed for certain services.

Program Funding and Access: Colorado funds our Medicaid program through state and federal dollars. Medicaid is an entitlement program, which means that all who are eligible for Medicaid can access the program, regardless of the funding level in a given year. This does not mean that it is always easy to access Medicaid, even when eligible. And since the program is administered by counties, funding levels for county staff and other administrative roles can make it easier or harder for Coloradans to access the program. On top of this, not all medical providers accept Medicaid which limits the ability of Coloradans to seek health services even if enrolled, such as if the nearest provider is a 2+ hour drive away.

Note: This data is from before the pandemic and does not reflect changes in enrollment rules during the COVID-19 pandemic and public health emergency.

Statewide Program Access 2015-19: Over the study period of this report, an average of 89.0% of the population at or below 133% of FPL (i.e., the population who is likely to be eligible for Medicaid) were enrolled in Medicaid in Colorado.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

The Supplemental Nutrition Assistance Program or SNAP helps low-income Coloradans purchase food by providing individuals and families with a monthly cash benefit that can be used to buy certain foods. SNAP is an entitlement program that is funded by the federal and state governments and administered by counties in Colorado.

State Department: Department of Human Services

Eligibility: Currently, Coloradans qualify for SNAP if they have incomes below 200% FPL, are unemployed or work part-time or receive other forms of assistance such as TANF, among other eligibility criteria. Income eligibility for SNAP was different during the study period of this report than today—it was 130% FPL back in 2019 for example. The US Department of Agriculture uses the population at or below 125% FPL when calculating the Program Access Index (or PAI) for SNAP. We follow this practice in our analysis despite Colorado currently having a higher income eligibility threshold.

Program Benefits: SNAP participants receive a monthly SNAP benefit that is determined by the number of people in their household and their income. Benefit amounts decrease as income increases, helping households avoid a sudden loss of SNAP when their incomes increase, even by a minor amount. Benefits are provided to an Electronic Benefit Transfer (EBT) card that can be used to purchase eligible food items, such as fruits and vegetables; meat, poultry, and fish; dairy products; and breads and cereals. Other items, such as foods that are hot at their point of sale, are not allowable purchases under current SNAP rules.

Program Funding and Access: SNAP, like Medicaid, is a federal entitlement program. This means that Colorado must serve any Coloradan who is eligible for the program. As such, funding should not be a limit to how many Coloradans can be served by the program. However, funding for administration of SNAP at the state and county level can limit the ability of county human service departments to enroll those who are eligible. Other program rules and administrative barriers can make it difficult for Coloradans to receive the benefits they are legally entitled to receive.

Statewide Program Access 2015-19: Over the study period of this report, an average of 61.1% of the population at or below 125% of FPL (i.e., the population who is likely to be eligible for SNAP) were enrolled.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

The Special Supplemental Nutrition Program for Women, Infants, and Children, also know as WIC, provides healthcare and nutritional support to low-income Coloradans who are pregnant, recently pregnant, breastfeeding, and to children under 5 who are nutritionally at risk based on a nutrition assessment.

State Department: Department of Public Health and Environment

Eligibility: To participate in WIC you must be pregnant, pregnant in the last six months, breastfeeding a baby under 1 year of age, or a child under the age of 5. Coloradans do not need to be U.S. citizens to be eligible for WIC. In terms of income, households cannot have incomes that exceed 185% FPL. Families who are enrolled in SNAP, TANF, Food Distribution Program on Indian Reservations (FDPIR), or Medicaid are automatically eligible for WIC. Regardless of gender, any parents, foster parents, or caregivers are able to apply for and use WIC services for eligible children.

Program Benefits: WIC provides a range of services to young children and their parents. These include funds to purchase healthy, fresh foods; breastfeeding support; personalized nutrition education and shopping tips; and referrals to health care and other services participants may be eligible for.

Program Funding and Access: WIC is funded by the US Department of Agriculture. The state uses these federal funds to contract with local providers, known as WIC Clinics. In most cases, these are county public health agencies, but that is not the case in all Colorado counties. Some WIC Clinics cover multiple counties, while others are served by multiple clinics. Private non-profit providers are also eligible to be selected as a WIC Clinic.

Statewide Program Access 2015-17: Between 2015 and 2017, an average of 52.2% of the population eligible for WIC were enrolled in the program in Colorado.

Financial Security:
Colorado Works

Colorado Works is the name given to Colorado’s program for Temporary Assistance to Needy Families or TANF. It is an employment program that supports families with dependent children on their path to self-sufficiency. Participants can receive cash assistance, schooling, workforce development and skills training depending on the services available in their county.

State Department: Department of Human Services

Eligibility: In general, Coloradans are eligible to enroll in TANF if they are a resident of Colorado, have one or more children under the age of 18 or pregnant, and have very low or no income. For example, to be eligible to receive a basic cash assistance grant through TANF, a single-parent of one child could not earn more than $331 per month, with some exclusions—and would only receive $440 per month (as of 2022). That said, there are other services provided by counties through TANF that those with incomes as high as $75,000 may be eligible for. In addition to these, participants in TANF are required to work or be pursuing an eligible “work activity” or work-related activity. Any eligible individual can only receive assistance if they have not previously been enrolled in TANF for a cumulative amount of time of more than 60 months—this is a lifetime limit that does not reset. Counties may have additional requirements and offer benefits that are not available in other counties in Colorado.

Program Benefits:  While the exact benefits that one is eligible for under TANF can vary, all qualified participants are eligible to receive a monthly cash payment, call basic cash assistance. Other than cash assistance, counties are have a lot of choice in how to use their TANF funding; generally a use of TANF funds is appropriate so long as it advances one or more of the four purposes of the program: (1) provide assistance to needy families so that children can be cared for in their own homes or in the homes of their relatives; (2) end the dependence of needy families on government benefits by promoting job preparation, work, and marriage; (3) prevent and reduce the incidence of out-of-wedlock pregnancies; and (4) encourage the formation and maintenance of two-parent families.

It is important to note that those eligible for TANF are also eligible for many of the other programs we’ve included in this report, such as SNAP, Medicaid, and CCCAP.

Program Funding and Access: Colorado funds its TANF program through funds received from the federal government through the Temporary Assistance for Needy Families block grant. Most of the federal funds are allocated by the state to counties, which are required to provide a 20% match of state funding. Federal and state rules allow the state and counties to retain a portion of unspent funds in a TANF reserve.

Statewide Program Access 2015-19: Over the study period of this report, an average of 50.7% of the population at or below 100% of FPL (i.e., the population who is likely to be eligible for TANF) were enrolled in TANF in Colorado.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

The Colorado Child Care Assistance Program provides child care assistance to low-income families and caregivers living in Colorado in the form of reduced payments for child care. It is a program funded by the federal, state, and county governments and is administered by counties in Colorado. The share owed by parents/caregivers is determined on a sliding scale based on the family’s income.

State Department: Department of Early Childhood Education

Eligibility: Counties set eligibility for families separately, but must serve families with incomes at or below 185% of the Federal Poverty Limit. Families accepted to the program are no longer eligible once their income exceeds 85% of the state median income. Parents or caregivers must be employed, searching for work, or engaged in another approved activity to be eligible for CCCAP. Parents and caregivers enrolled in Colorado Works (Temporary Assistance to Needy Families or TANF) or in the child welfare system are also eligible to participate in CCCAP. Generally, CCCAP serves families with children under 13, although children as old as 19 may be eligible under certain circumstances.

Program Benefits: If a family is eligible for CCCAP and has income, they may likely have to pay a portion of their child’s or children’s child care costs each month. The amount that families owe is based on their gross income, number of household members, and the number of children in child care in the household. As such, households tend not to experience a benefit cliff with CCCAP when they see their incomes increase

Program Funding and Access: Colorado funds the CCCAP program using federal dollars it receives from the Child Care and Development Block Grant program. The state allocates federal and state funds to counties using a formula that takes into account factors like current caseloads and the number of eligible residents. Assistance is available until the county’s funds are spent, so the number of families that can be served is often a function of how much funding is available and the income and composition of the household that applies. It is not uncommon for counties to overspend or underspend their allocations of funds. The state reallocates unspent funds from counties who underspent to those who overspent. While underspending could indicate a problem with the way a county administers its CCCAP program, it could just as likely be a sign that there are few providers in the county who participate in CCCAP—or a lack of providers generally.

Statewide Program Access 2015-19: Over the study period of this report, an average of 10.8% of the population at or below 165% of FPL and younger than age 13 (i.e., the population who is likely to be eligible for CCCAP) were enrolled in CCCAP.

Housing:
HUD rental assistance programs

The US Department of Housing and Urban Development (HUD) has three housing assistance programs that we look at together: Housing Choice Vouchers (Section 8), Project-based Section 8, and Public Housing. In Colorado, these programs provided assistance to over 90% of the households who received federal housing assistance from all HUD programs. Through federally funded, local or regional public housing agencies (PHAs) are the agencies that administer these programs, through not all are available in all counties. These are not the only programs available in Colorado that assist households afford the cost of housing, such as units funded through federal and state tax credit programs.

State Department: Department of Local Affairs

Eligibility: Generally, households with incomes under 50% of the area median income (AMI) of the county they live in are eligible for these rental assistance programs, although PHAs have discretion to select households with incomes at higher percentages of AMI. That said, HUD requires that 75% of new vouchers issued through the Housing Choice Voucher/Section 8 program in a given year are targeted to households with incomes at or below 30% of AMI. PHAs are also able to create criteria that give priority to certain types of households who are on waiting lists for these programs.

Program Benefits: These rental assistance programs help households afford the cost of housing by reducing their housing costs to around 30% of their household income. In the case of the Housing Choice Voucher program, the PHA pays the voucher holder’s landlord the remaining portion of the rent.

Program Funding and Access: Funding and access are both challenges for these rental assistance programs. In addition to limitations on the number of public housing units or housing vouchers a PHA can manage or issue, lack of funding compared to the need constrains the ability of PHAs to assist low-income households. In 2020, Coloradans were on waitlists for Housing Choice Vouchers for an average of 17 months. Waitlists also exist for the other rental assistance programs.

Statewide Program Access 2015-19: Over the study period of this report, an average of 21.1% of renter households with incomes at or below 50% AMI (i.e., the population who is likely to be eligible for HUD rental assistance programs) were living in subsidized housing.