CFPB Enforcement 2025: Strategic Shift to Data Brokers, Rewards Points, and Prepaid Card Compliance

The Regulatory Landscape: SEC Pullback, CFPB Push Forward

In fiscal year 2025, the U.S. Securities and Exchange Commission (SEC) reported an intentional decrease in enforcement actions, collecting $17.9 billion total—$10.8 billion from disgorgement and interest, $7.2 billion from civil penalties. This strategic pullback creates a regulatory vacuum that other agencies are filling. The Consumer Financial Protection Bureau (CFPB) is emerging as a dominant force, pivoting aggressively toward consumer protection in digital finance, data privacy, and prepaid products. Unlike the SEC's broad market focus, the CFPB is targeting specific pain points: data broker exploitation, deceptive rewards programs, and systemic failures in government benefit disbursement. This enforcement shift signals a new era where financial institutions must adapt to heightened scrutiny beyond traditional banking.

Action 1: Regulating Data Brokers Under FCRA

The CFPB's proposed rule to treat data brokers as consumer reporting agencies under the Fair Credit Reporting Act (FCRA) marks a seismic expansion of its oversight. Currently, data brokers can sell detailed financial profiles—including Social Security numbers and home addresses—without restrictions, enabling identity theft and fraud. The proposal would impose FCRA protections, requiring:

• Permissible Purpose Limitations: Data sales only to buyers with legitimate needs like credit or employment evaluation, explicitly excluding marketing.
• Clear Consumer Consent: Preventing reliance on fine-print permissions for sharing sensitive data.
• Accountability Frameworks: Mandating compliance with accuracy, dispute resolution, and privacy safeguards akin to traditional credit bureaus.

This move addresses legislative gaps, as efforts like the American Privacy Rights Act (APRA) have stalled. For financial institutions, it means third-party data sourcing must now align with FCRA standards, increasing due diligence burdens. The CFPB is effectively bridging U.S. privacy regulation, where no comprehensive federal law exists as of early 2025, by leveraging existing financial statutes. This aligns with global trends like the EU's GDPR, which mandates strict data processing rules, though the CFPB's approach is sector-specific.

Action 2: Cracking Down on Deceptive Rewards Points Practices

The CFPB's warning to credit card issuers targets three deceptive practices in rewards programs, treating points as a monetary system requiring transparency. Key areas of concern include:

1. Devaluing Accrued Points: Criticizing practices like Chase Sapphire Preferred's 30-day notice policy as unfair bait-and-switch tactics.
2. Hiding Conditions in Fine Print: Prohibiting terms that contradict promotional language or unlawfully cancel earned rewards.
3. Ensuring Redeemability: Holding companies accountable for technical issues with partners that cause lost points.

Enforcement precedent is strong—the CFPB levied a $100 million fine against Bank of America in 2023 for withholding rewards. This action follows a May public hearing with the Department of Transportation on airline and credit card rewards, indicating cross-agency coordination. For compliance, financial institutions must audit reward terms, ensure clear disclosures, and monitor partner integrations. The CFPB's focus echoes broader consumer protection trends, such as the EU's Payment Services Directive 2 (PSD2) requirements for transparent pricing, though U.S. rules are more targeted.

Action 3: Lawsuit Against Comerica's Direct Express Program

The CFPB's lawsuit against Comerica Bank alleges systematic failures in its Direct Express government benefits prepaid card program, serving millions of unbanked, elderly, or disabled individuals. Key allegations include:

• Violating Chargeback Rights: Instructing cardholders to contact merchants directly instead of reversing unauthorized charges as required under Mastercard rules, misleading them to waive legal rights.
• Forced Account Closures: Vendors allegedly compelled thousands to close accounts to stop pre-authorized payments, incurring extra fees for replacement cards.

Comerica, which lost the contract renewal to BNY but is managing a transition, has countersued the CFPB, claiming the investigation exceeds statutory authority. This case highlights enforcement in prepaid products, emphasizing vendor management and consumer rights under regulations like the Electronic Fund Transfer Act (EFTA). It also reflects the CFPB's scrutiny of programs impacting vulnerable populations, similar to EU directives on payment accessibility.

Connecting the Dots: CFPB's Coherent Enforcement Agenda

These three actions reveal a strategic focus on consumer protection in digital finance, data privacy, and prepaid products. The CFPB is:

• Expanding Jurisdiction: Moving beyond traditional banks to data brokers and fintechs, leveraging FCRA to regulate data flows.
• Targeting Digital Monetization: Treating rewards points as financial instruments, ensuring transparency in emerging digital economies.
• Protecting Vulnerable Consumers: Enforcing prepaid card safeguards for government benefit recipients, addressing systemic gaps.

This agenda aligns with global shifts—for example, the EU's Digital Operational Resilience Act (DORA) emphasizes operational integrity in financial services, while the CFPB focuses on consumer-facing fairness. The decrease in SEC enforcement may reflect resource reallocation, but the CFPB's actions show no such retreat, instead intensifying scrutiny where consumer harm is palpable.

Compliance Recommendations for Financial Institutions

To navigate this evolving landscape, financial institutions should adopt proactive strategies:

1. Audit Data Broker Relationships: Review third-party data sourcing for FCRA compliance if the proposed rule is finalized. Implement permissible purpose checks and consent mechanisms.
2. Revamp Rewards Programs: Conduct internal reviews of point devaluation policies, disclosure clarity, and partner coordination. Ensure terms align with promotional language and redemption is reliable.
3. Strengthen Prepaid Card Protections: Enhance chargeback processes, vendor oversight, and fee transparency for government benefit programs. Train staff on consumer rights under EFTA and network rules.
4. Monitor CFPB Guidance: Track enforcement trends and public statements, as the bureau often signals priorities through warnings and hearings.
5. Leverage Technology: Use compliance monitoring tools to stay updated on regulatory changes. Platforms like AIGovHub's compliance monitoring tools provide real-time alerts and analysis across jurisdictions, helping organizations adapt quickly.

Additionally, consider cross-domain risk management. For instance, AI-driven platforms like RisksRadarAI can detect patterns linking data misuse to financial crime, supporting broader compliance efforts.

Forward-Looking Analysis: CFPB Enforcement in 2026

Looking ahead, the CFPB's strategy will likely evolve in 2026 with increased focus on:

• AI and Algorithmic Decision-Making: Building on existing guidance, such as CFPB Circular 2023-03 requiring specific reasons for adverse credit actions from AI models. This may align with state laws like the Colorado AI Act, effective 1 February 2026, which mandates impact assessments for high-risk AI in financial services.
• Open Banking Implementation: With the CFPB's final rule on Dodd-Frank Section 1033 phased from 2026, enforcement may target data-sharing violations and consumer consent abuses.
• Cross-Border Coordination: As U.S. data broker rules develop, collaboration with EU authorities under GDPR could intensify, especially for multinational firms.
• Enhanced Penalties: Leveraging precedents like the Bank of America fine to deter deceptive practices in digital finance.

Financial institutions should prepare by integrating compliance into digital transformation projects, investing in regulatory technology, and fostering a culture of consumer-centricity. The CFPB's agenda underscores that in an era of digital finance, protecting consumers is not just ethical—it's a regulatory imperative.

Key Takeaways

• The CFPB is intensifying enforcement in 2025, focusing on data brokers, rewards points, and prepaid cards, while the SEC reports a decrease in actions.
• Proposed FCRA rules for data brokers aim to restrict data sales to permissible purposes and require clear consent, addressing privacy gaps.
• Deceptive rewards practices—point devaluation, hidden terms, redemption failures—are under scrutiny, with enforcement precedents like the $100 million Bank of America fine.
• The Comerica lawsuit highlights systemic failures in government benefit programs, emphasizing chargeback rights and vendor management.
• Compliance requires proactive audits, technology adoption, and monitoring of CFPB trends to avoid penalties and protect consumers.

This content is for informational purposes only and does not constitute legal advice.