Congress Rolls Back Major CFPB Rules

Update: On May 9, 2025, President Trump signed S.J. Res. 18 and S.J. Res. 28 into law, overturning the CFPB's overdraft lending rule and its Larger Participants rule. The CFPB is now barred from reissuing a rule in "substantially the same form" or a new rule that is "substantially the same" unless Congress authorizes it to do so via new legislation.

We anticipate that the CFPB's rules limiting overdraft fees and regulating large digital payment apps will be overturned.

On April 9, 2025, the House of Representatives voted along party lines to approve two Senate-passed joint resolutions under the Congressional Review Act (CRA). These resolutions aim to overturn the CFPB's rules limiting overdraft protection offerings and asserting authority to regulate large digital payment apps.¹ We expect President Trump to sign both measures into law.

These rules were finalized during the Biden administration. The overdraft credit rule² subjected overdraft fees to the requirements of the Truth in Lending Act. The larger participant rule subjected nonbank digital payments companies to the CFPB's supervisory authority and to CFPB regulation of privacy, fraud prevention, debanking risks, and other consumer financial protection laws.

The CRA prohibits the CFPB from reissuing a rule in "substantially the same form" or issuing a new rule that is "substantially the same" as the disapproved one unless Congress provides specific authorization to do so in the future.³ Therefore, the CFPB may be unable to regulate overdraft fees and large digital payment apps moving forward.

We recommend that entities impacted by this legislation closely monitor the reactions of state regulators; we expect at least some may pass similar rules. New York Attorney General Letitia James authored a letter signed by 22 other attorneys general urging members of the House not to overturn the overdraft lending rule.⁴ Additionally, the New York Department of Financial Services has already proposed amendments to state regulations governing overdraft and insufficient funds fees.⁵ These amendments would cap the number of such fees an institution could charge, stipulate rules for transaction processing to prevent banks from processing in a manner designed to maximize overdraft fees, and limit the circumstances under which an institution may charge overdraft fees.⁶See our recent client alert for more on this next frontier for consumer protection.

¹ See S.J.Res. 18, 119th Congress (2025) (overdraft lending) and S.J.Res. 28, 119th Congress (2025) (Larger Market Participants rule).

² See 89 Fed. Reg. 106788 (Dec. 30, 2024).

³ 5 U.S.C. § 801(b)(2).

⁴ See Press Release, Attorney General James Seeks to protect Consumers from High Overdraft Fees (Apr. 9, 2025) https://ag.ny.gov/press-release/2025/attorney-general-james-seeks-protect-consumers-high-overdraft-fees.

⁵ New York State Department of Financial Services, Amendments to 3 NYCRR Parts 32 and 6: Deposit Account Transactions and Associated Charges (Jan. 22, 2025) https://www.dfs.ny.gov/system/files/documents/2025/01/rppo-banking-3nycrr32and6.pdf.

⁶ See N.Y. Reg., Jan. 29, 2025, at 3 NYCRR § 32.3(b) (proposed) (limit on insufficient-funds fees); N.Y. Reg., Jan. 29, 2025, at 3 NYCRR § 32.2(a) (proposed) (transaction processing); N.Y. Reg., Jan. 29, 2025, at 3 NYCRR § 32.3(c) (proposed) (treatment of overdraft fees).