Guest post by Craig Cowie of Montana:
There have been many great posts about the work the CFPB has done to help consumers, including noting that the CFPB has used its penalty fund to allocate more than $3 billion to pay 6.7 million consumers back for money that companies illegally took from them. But there are a few points I have not seen made about how important the CFPB’s civil penalty fund is to consumers.
First, without the fund, the majority of these consumers would have gotten back little to none of this money. That’s because the companies in cases where the fund is used usually simply do not have the money to pay consumers back: they are out of business, bankrupt, enjoined from further operations, or otherwise don’t have the money—in a couple of cases the parties were even in jail. Moreover, before the CFPB allocates any money from the fund, it determines whether consumers likely could recover the money from another source. Only if the fund is their only reasonable option will the CFPB allocate funds. So, without this fund, these consumers likely will get nothing back.
When I looked at roughly the first eight years of the CFPB’s operation, the fund had issued more than 905,000 checks to consumers with an average of almost $500. In 70% of the cases, the checks averaged more than $1,000. In 85% of the cases where the CFPB had allocated funds to pay consumers back, the data strongly indicated that the wrongdoers could not have paid the consumers back themselves. All told, the wrongdoers in those cases—many of whom paid a few dollars or nothing at all—were able to pay only 4% of the almost $545 million in harm they caused, and in half the cases, they could pay less than 1% of the more than $300 million in harm they caused. If you want to see all the details, you can find the article here or on SSRN here. I have not had time to review the cases from the past few years, but I do not have a reason to believe that the results will be any different.
Second, the CFPB still has to send checks to harmed consumers for more than $2 billion of that $3+ billion it has allocated. The CFPB was scheduled to start distributions in 2025 in ten cases where consumers lost almost $2.15 billion, and there were two additional cases with almost $60 million allocated where the CFPB had not announced that it was ready to begin distributions. Moreover, as of February 18, 2025, the CFPB was still distributing almost $75 million to consumers in eighteen other cases, and although it had distributed more than $630 million from those cases, distributions often require follow-up to ensure that the checks are cashed. But these distributions and follow-ups require people: the CFPB uses some of its own employees to administer the fund, but it primarily relies on contractors to distribute the money. The CFPB’s employees have mostly been ordered not to work, and according to DOGE’s “Wall of Receipts”, the CFPB has canceled more than 200 of its contracts. DOGE’s data on these contracts is not very transparent or user friendly, but at least one of the contracts terminated involved Rust Consulting, an entity that the CFPB has frequently used to distribute money to consumers from the fund. It is not possible to tell from the available information whether that contract was for distributions from the fund. The CFPB knows who most of these consumers are, but will it send them their money? Or has the stop-work order prevented the CFPB from distributing these funds—money that was taken illegally from consumers and that the CFPB has already determined should be given back?
Last, the fund is an extremely efficient and cost-effective way for the CFPB to give consumers their money back: more than 97% of the money allocated from the fund since its inception has gone to consumers harmed in CFPB cases. The CFPB has set aside less than 1.6% of the amount allocated through 2024 to pay for administration of the fund. It has only allocated 0.8% to anything other than harmed consumers and overhead, and it has only done that twice (the last of which was in 2016); both times they were for consumer education programs. With that relatively low overhead, the CFPB is often able to allocate funds that will give consumers back 100% of the money illegally taken from them.
