Overlapping missions and jurisdictions are fueling competition between the Consumer Financial Protection Bureau and the Federal Trade Commission, according to former officials at both agencies.
Though there is often underlying tension between government agencies, some sources said it is particularly acute when it comes to the CFPB and FTC. Both agencies share oversight of certain areas, including debt collection, payday lending and auto financing, and appear anxious to be known as the more aggressive one in rooting out potential consumer harm.
"In the current environment where there are pressures to be very pro-consumer, both internally and externally at these agencies, the goal is to not be perceived as the less aggressive agency," said Leonard Gordon, a former FTC official who's now a partner at Venable's antitrust and advertising and marketing groups. "There's always rivalry between government agencies that have shared missions and both are trying to do their best to be the toughest cop on beat."
Both FTC and CFPB officials denied any rivalry, arguing that they are focused on protecting consumers.
"This is more about coordination in consumer protection than it is about competition," said Chris Koegel, assistant director in the division of financial practices at the FTC. "Part of this has to do with timing following the financial crisis … even before the CFPB was created, the FTC was devoting more resources and energies to preventing the financial scams and unlawful financial practices that we're seeing."
CFPB Director Richard Cordray also emphasized coordination over competition with the FTC.
"I have learned a lot from the work I have done with the FTC, going back to my time as Ohio Attorney General. At the CFPB, our people have appreciated the strong sense of teamwork we have built with the FTC," said Cordray in a statement to American Banker. "Both of us recognize that the many bad actors cropping up around the country give us more than enough work to do together, and that we are more effective working together than working alone."
Still, some observers point to a perceived competition between the two agencies in Operation Collection Protection, a joint initiative launched last year between the FTC, CFPB and state enforcement agencies to crack down on illegal debt collection.
The FTC has periodically issued updates on the actions it has taken, noting state authorities which have partnered on cases. But the CFPB is often not named in those cases, and the agency itself barely refers to the operation despite continuing to take its own actions against debt collectors.
"The CFPB and FTC seem to be doing their own thing," said Alan Kaplinsky, who heads the consumer financial services group at Ballard Spahr. In Operation Collection Protection, "If you examine the consent orders and lawsuits filed, you will see that while the FTC and the CFPB often partner with state AGs, they don't ever formally partner with each other."
When the CFPB takes action in the banking arena, it often partners with the appropriate banking regulator. But both the CFPB and FTC have separately gone after cell phone companies over the same allegations — so-called "cramming," which allows third-parties to make charges on consumer bills — without working together. The FTC has taken actions against companies like AT&T and T-Mobile while the CFPB cited Sprint and Verizon.
Kaplinsky said the FTC is not alone in not wanting to be upstaged by the CFPB, which opened its doors in 2011.
"This goes back to what I call the 'regulatory Olympics' where the other federal agencies have become tougher regarding enforcement because they don't want to be left in the dust by the CFPB," he said. "My impression is that the CFPB and FTC compete with each other. The seeds for this were planted when Congress decided to confer on the CFPB the right to regulate non-banks that remain subject to the enforcement jurisdiction of the FTC."
Gordon, the former FTC official, said regulatory competition alone is not causing the agencies to come down harder on firms.
"The regulators are paying more attention to what is required to substantiate a debt. The FTC started that and the CFPB has built on it" and "the bar seems to get higher with each case as cases bounce back and forth between the two agencies," Gordon said. "The agencies are getting more aggressive in terms of applying the laws, such as what they deem as abusive or deceptive acts or practices, and also in terms of seeking settlements involving higher penalties and monetary relief."
To be sure, the CFPB and FTC have taken some actions together. They filed a joint action in early 2015 against a mortgage servicer and they do share work, specifically on cases against debt collectors and payday lenders. Both agencies have also partnered on events related to debt collection and jointly filed several amicus briefs to give an opinion on a case. The CFPB also issues an annual report to Congress about the work that it has done, along with the FTC, in enforcing the Fair Debt Collection Practices Act.