Protecting Consumer Protection: Filling the Federal Enforcement Gap

Abstract

Since 2014, when a first-of-its-kind empirical study looked at how public enforcers use their authority under UDAP laws, the enforcement landscape has changed. Most notably, the Trump Administration has weakened enforcement on the federal level. In the wake of this political shift, many state enforcers rushed to fill the gap left by weak federal enforcement. At the same time, the state enforcers themselves experienced changes both internal (including changes to budgets and stated policy priorities) and external (electoral changes regarding state Attorneys General, changes to statutory authority, and other changes governing the enforcer’s authority). This article presents findings from a follow-up study examining the public UDAP enforcement landscape in 2018. The principal finding from 2018 is that states employed substantially the same strategies toward UDAP enforcement as they did in 2014. This finding validates the central observation of both years’ studies of state UDAP enforcement: states can be characterized by distinct strategies of consumer protection enforcement. This information alone offers insight into the remarkable stability of state UDAP enforcement, even across varied strategies and a changing landscape. Other findings also begin to shed light on how states might react to extreme changes in enforcement on the federal level. For example, even though six states have made public statements backed by concrete actions to attempt to fill an enforcement gap left by the absence of federal action, state enforcement case volume was up among all states. Public compensation, however, was down among all types of enforcement actions in 2018. Finally, comparisons of enforcement case volumes and strategy across states that experienced other changes over the time period -- changes in leadership and statutory authority, for example -- mirrored the overall trend of an increase in enforcement coupled with a general strategic stability. Strategies as a whole do not seem closely aligned with partisan politics. This study creates a needed point of comparison to the 2014 data, allowing stakeholders to ask deeper questions about how public enforcers should wield their discretion and authority to resolve consumer protection cases. With debt levels in America at an all-time high, and federal enforcement of consumer law at an all-time low, research-based action is urgently needed to sharpen our understanding of the role and potential effectiveness of institutions tasked with protecting consumers from fraudulent lending schemes and oppressive debt collection strategies as well as the myriad other types of consumer scams that lead Americans toward more debt. The data here give state officials and state-based reformers the information needed to maximize enforcement in a way that makes consumers’ lives better.