Rules issued by the CFPB, including Regulation F on debt collection, are not invalid simply because of how the agency is funded.
The statute authorizing the Consumer Financial Protection Bureau to draw money from the combined earnings of the Federal Reserve System to carry out its duties satisfies the Constitution's Appropriations Clause.
- Case
- Consumer Financial Protection Bureau v. Community Financial Services Association of America, Ltd.
- Citation
- No. 22-448 (U.S. May 16, 2024)
- Court or agency
- Supreme Court of the United States
- Date
- May 16, 2024
- Precedential
- Yes (published)
- Law
- Regulation F, Other
Summary
Payday-lender trade groups, including a Texas association, challenged a CFPB lending rule, and the Fifth Circuit held the Bureau's funding unconstitutional. In a 7-2 opinion by Justice Thomas, the Supreme Court reversed, holding that a law identifying a source of public money and authorizing its use for designated purposes is a valid appropriation.
Background
Unlike most federal agencies, the Consumer Financial Protection Bureau does not get its money through annual appropriations bills. Congress instead authorized it to draw from the Federal Reserve System an amount its Director considers “reasonably necessary,” up to an inflation-adjusted cap.
The Community Financial Services Association of America and the Consumer Service Alliance of Texas, trade groups for payday lenders and credit-access businesses, sued in the Western District of Texas to block the CFPB’s 2017 Payday Lending Rule. The district court ruled for the Bureau. In 2022 the Fifth Circuit reversed, holding that the funding mechanism violates the Appropriations Clause (51 F.4th 616). That ruling raised doubts, at least in Texas, Louisiana, and Mississippi, about rules the CFPB had issued with that funding.
What the court held
Justice Thomas wrote for a 7-2 majority. Justice Kagan (joined by Justices Sotomayor, Kavanaugh, and Barrett) and Justice Jackson filed concurring opinions. Justice Alito, joined by Justice Gorsuch, dissented.
Looking at the Constitution’s text, pre-founding English and colonial practice, and the practice of the First Congress, the Court concluded that an appropriation is a law that authorizes spending from a specified source of public money for designated purposes. The CFPB’s statute does both. The Court therefore held that the funding mechanism “satisfies the Appropriations Clause,” reversed the Fifth Circuit, and remanded.
Our take
For Texas consumers, the practical importance of this case is stability. Regulation F, the CFPB’s debt collection rule that interprets the FDCPA, was issued by an agency the Fifth Circuit had said was unconstitutionally funded. After this decision, that argument is no longer available to collectors.
The decision does not settle every question about the CFPB. In May 2025 the CFPB withdrew dozens of guidance documents, so consumers and lawyers should check whether any particular CFPB guidance is still in effect before relying on it. Regulation F itself is a formal rule, codified at 12 C.F.R. part 1006, and as of this writing it remains in the current Code of Federal Regulations.
What it means if you’re sued in Texas
Federal debt collection rules still apply to collectors pursuing you in Texas, including the FDCPA itself and Regulation F. Your rights under the Texas Debt Collection Act are separate and do not depend on the CFPB. A free case review is available if you want to understand which rules apply to the collector contacting you.
Takeaway
The constitutional funding challenge that had threatened CFPB rules in Texas is over; any future limits on the CFPB's rules will come from Congress, the agency itself, or ordinary legal challenges.
Sources
Primary authority
Secondary sources
This summary and analysis are general information, not legal advice. Later decisions, amendments or agency actions may change the law; check the current status before relying on it.