The Supreme Court has emboldened the CFPB, threatening American consumers
In a recent decision, the Supreme Court upheld the Consumer Financial Protection Bureau (CFPB) funding structure, allowing it to continue operating with significant autonomy. This ruling will only embolden the CFPB, which, under the leadership of Director Rohit Chopra, has increasingly instituted overly broad regulatory actions. A recent directive has cast an unnecessarily wide and destructive net over popular comparison shopping websites, arguably threatening the American way of life.
The Supreme Court has preserved the CFPB’s carte blanche but also brings to light the agency's overreach. Originally intended to regulate financial product comparison tools, the CFPB’s latest directive ensnares websites that millions of Americans rely on for services ranging from booking vacations to finding babysitters and plumbers. The circular's broad language enables ambiguous interpretations between financial services and the wider spectrum of consumer services, setting a dangerous precedent that could even extend to freelance and gig economy platforms like Upwork or Fiverr. This is not just an oversight; it's an overreach.
If you’re like many Americans, you’ll soon be using Expedia to book flights for your family’s summer vacation. Unfortunately, those same American families will be disappointed to hear that Sen. Elizabeth Warren’s (D-Mass.) CFPB fundamentally misinterpreted its mandate, endangering platforms like Expedia.com, Care.com, Angie's List (angi.com), ServiceMaster.com and even Sittercity.com.
As inflation relentlessly pressures American households, the relevance of comparison shopping tools becomes even more pronounced. These digital aids are indispensable as families navigate the complexities of budgeting under rising costs. By leveraging these tools, consumers can effortlessly find the best prices, stretching their increasingly strained budgets. As the Consumer Price Index (CPI) indicates persistent inflation, the average American finds solace in these applications, which not only mitigate the impact of inflation but also restore some control over their financial destinies.
This efficiency is not solely about dollar amounts; it represents a fundamental shift in consumer behavior — where convenience meets frugality. With nearly 37 million U.S. consumers having downloaded price comparison apps in just 10 months of 2022 and an estimated 29 percent of Americans using price comparison tools, it’s clear that these tools have transformed from a niche convenience into a mainstream necessity. Let’s not forget that a penny saved is a penny earned, and one in four Americans puts stock in that.
Ironically, price comparison websites are achieving what the CFPB was fundamentally created to do: Protect the consumer’s pocketbook. By providing a platform for easy access to competitive pricing information, these tools naturally enhance market transparency and drive down prices, offering a shield against the inflationary pressures that so many Americans currently face. These tools’ very existence, let alone their widespread adoption, has spurred a competitive environment where businesses must strive to offer the best value, thus directly benefiting the consumer.
In stark contrast, the CFPB’s recent moves threaten to obscure this clarity, potentially enveloping the marketplace in a shroud of opacity. The market has already naturally found a way to make pricing more transparent and services more accessible without government intervention. Chopra has only undermined these organic improvements, jeopardizing consumer welfare rather than protecting it.
Thousands of professionals depend on these sites for client referrals and are now subject to oversight from a financial regulatory body that should have no say in their operations. This is not merely regulatory zeal; this is a misunderstanding of digital ecosystems at a fundamental level. Imagine the upheaval as plumbers, electricians and babysitters scramble to comply with regulations irrelevant to their industries, scale back their services or shut down altogether.
Is it negligent idiocy or a maliciously deliberate assault? Either way, it’s time to confront the reality that the CFPB, under its current trajectory, has evolved from a supposed consumer advocate to a bureaucratic gatekeeper that could lock out the potential of digital marketplaces through misguided crusades, contrary to the best interests of the American consumer. The agency’s mission creep into non-financial domains is catastrophic.
What we need is not reform; the CFPB needs a full stop.
Online marketplaces, professionals and the right to make everyday choices without government interference must be protected. The time to act is now — before every digital action comes under the purview of an agency that has lost its way led by an unelected bureaucrat. The CFPB demands rigorous scrutiny by unconflicted watchdogs to restore sanity to our digital and economic landscapes. Only then can we ensure that our digital domains remain vibrant and accessible from the heavy hand of misguided governance.
Patrick M. Brenner is the founder and president of the Southwest Public Policy Institute, a research institute dedicated to improving the quality of life in the American Southwest by formulating, promoting, and defending sound public policy solutions.