CFPB Issues Guidance on Criminal Violations of Consumer Finance Laws: Green Jumpsuits in Our Future?

On June 27, 2025, the CFPB will publish in the Federal Register a policy statement titled “Guidance on Referrals for Potential Criminal Enforcement” (“Guidance”), which sets forth factors the CFPB will consider in making criminal referrals and the steps the CFPB intends to take to address offenses of its regulations that have potential criminal liability (“criminal regulatory offense”). 

The Guidance is in response to Executive Order 14294 (“EO”), titled “Fighting Overcriminalization in Federal Regulations,” which was issued on May 9, 2025.  The EO requires agencies to publish within 45 days a plan to address criminal liability for violations of their regulations, as well as a report within one year that lists all criminal regulatory offenses enforceable by the agency or the Department of Justice (“DOJ”). 

The CFPB oversees several federal consumer finance laws that have potential criminal liability for certain violations, including the Real Estate Settlement Procedures Act (“RESPA”), the Truth in Lending Act (“TILA”), and the Fair Credit Reporting Act (“FCRA”).  Some of these statutes only impose criminal liability for knowing or willful violations, but others may not require that level of culpability and appear to provide for strict liability.  The CFPB’s Guidance acknowledges that some of the CFPB’s regulations are enforceable criminally, and then sets forth a plan to potentially create a background mens rea standard (basically, the level of intent required) for all criminal regulatory offenses of statutes the agency oversees.

Criminal Referrals

The Guidance states that in exercising discretion in making referrals of criminal regulatory offenses, the CFPB will consider the following factors, among others:

• the harm or risk of harm, pecuniary or otherwise, caused by the alleged offense;

• the potential gain to the putative defendant that could result from the offense;

• whether the putative defendant held specialized knowledge, expertise, or was licensed in an industry related to the rule or regulation at issue; and

• evidence, if any is available, of the putative defendant’s general awareness of the unlawfulness of his conduct as well as his knowledge or lack thereof of the regulation at issue.

Addressing Criminal Regulatory Offenses

The Guidance states that the CFPB intends to take certain steps to address criminal regulatory offenses, which I briefly summarize below.

The Bureau will provide within 365 days of the EO a list of all criminal regulatory offenses enforceable by the CFPB or DOJ, and the range of potential criminal penalties for a violation and the applicable mens rea standard for the criminal regulatory offense. The CFPB will also publish this report on its webpage and annually update the report.  The CFPB will consider whether a regulation is listed in this report when considering whether to make a criminal referral.

The CFPB will examine its statutory authorities and determine whether there is authority to adopt a background mens rea standard for criminal regulatory offenses that applies unless a specific regulation states an alternative mens rea. Within 30 days of the submission of the report described above, the CFPB will submit a report to the Director of OMB assessing whether the mens rea standards for different offenses are appropriate, and if appropriate based on its aforementioned review of its statutory authorities, will present a plan for changing the applicable mens rea standards and adopting a generally applicable background mens rea standard.

In all future proposed and final rules that may provide for criminal regulatory offenses, the CFPB intends to include a statement identifying that the rule is a criminal regulatory offense and the authorizing statute.  In addition, when formulating the regulatory text of the CFPB’s proposed and final rules with criminal consequences, the CFPB intends to explicitly state a mens rea requirement for each element of a criminal regulatory offense, accompanied by citations to the relevant provisions of the authorizing statute.

My Thoughts

Although criminal referrals for violations of consumer finance laws come up rarely, our clients facing government enforcement actions have raised concerns about this in the past.  The CFPB’s planned report identifying all of the potential criminal regulatory offenses under the statutes the CFPB oversees, as well as describing the applicable mens rea standards, could prove useful to the industry when assessing potentially liability in an examination or investigation. 

In addition, many companies and individuals find themselves facing unintended potential violations of consumer finance regulations.  Consumer financial services regulations often are at the extremes of understandability (or lack thereof): either extremely complex and detailed (like TILA), or broad and unclear (like RESPA Section 8).  It is welcome that the Guidance states that, in deciding whether to make a criminal referral, the CFPB will consider evidence of the person’s knowledge that the conduct was unlawful and the regulation at issue, which appears to bring intent into the picture.  Also, the fact that the CFPB will assess whether a background mens rea standard is appropriate (I would expect them to add some knowing or willfulness standard), may in the end help companies and persons who find themselves inadvertently violating these often-obtuse rules. 

You can find the CFPB guidance document on public inspection at the Federal Register here.

If you would like to discuss any of the issues in the post, please email me at rich@garrishorn.com.