Trump targets consumer watchdog, threatening key financial protections

The future of America’s chief consumer financial watchdog is in serious doubt as the Trump administration escalates efforts to dismantle the Consumer Financial Protection Bureau (CFPB), jeopardizing a series of regulations designed to protect consumers from predatory financial practices.

The CFPB, created after the 2008 financial crisis, has faced a wave of turmoil since February, when the administration ordered the agency to suspend many of its oversight activities. Efforts to fire more than 1,400 remaining employeesdespite a court injunctionare now tied up in federal court, and key consumer protections are being systematically overturned.

Among the sweeping changes:

Overdraft fees may rise

A rule capping bank overdraft fees at $5 was poised to save 23 million consumers about $5 billion annually. Large banks currently charge around $35 per overdraft, despite most overdrawn transactions being less than $26 and repaid within days.

Congress voted to repeal the CFPBs overdraft limit under the Congressional Review Act (CRA), and President Trump is expected to sign it, ensuring that similar regulations cannot be reintroduced without direct congressional approval.

Despite industry claims that overdraft services offer needed flexibility, critics like Consumer Reports’ Chuck Bell argue that repealing the cap simply gives big banks the green light to rip off their customers.

Digital payment apps may escape scrutiny

The CFPB had also sought to regulate digital payment platforms like Venmo, CashApp, and services operated by Amazon and Google, requiring them to meet similar standards as traditional banks.

Congress passed a resolution to overturn that rule as well, aligning with tech companies’ arguments that federal oversight would be burdensome. Consumer advocates, however, warn this creates a significant gap in protections for users as payment apps grow in financial influence.

Medical debt protections hang in the balance

A third CFPB rule, aiming to remove unpaid medical bills from credit reports and prohibit lenders from considering medical debt, is under siege but not yet overturned. Although Republicans introduced a resolution to repeal it, no vote has yet occurred.

Meanwhile, lawsuits filed by trade groups could derail the measure, though bipartisan support for addressing the medical debt crisis has slowed its repeal.

If the rule survives, it could wipe $49 billion in medical debt from the credit reports of 15 million Americans.

Consumer fraud cases are being dropped

The CFPB has already dismissed multiple lawsuits against major banks and corporations, including Capital One, Wells Fargo, and Bank of America, weakening protections against fraud and financial abuse.

Advocacy groups warn that states may now need to step in to pursue cases once handled federally, but uneven enforcement could leave gaps in consumer rights.

Bottom line: With federal protections in retreat, the burden increasingly shifts to individual states to regulate banks, credit agencies, and tech platforms. Consumers could soon find it harderand more expensiveto navigate financial risks across the board.

Advocates are calling for vigilance, while court battles over the CFPBs future continue to play out.