US Consumer Watchdog Payouts in Limbo Due to Trump Administration Defunding

The US Consumer Financial Protection Bureau (CFPB), which enforces consumer protection laws, is facing a crisis as defunding by the Trump administration has put hundreds of millions of dollars in compensation payouts for borrowers allegedly harmed by companies such as Navient and others at risk.

A $100 million pot intended for Navient borrowers sits in limbo due to the agency’s work stoppage. The CFPB had agreed to pay this amount after a seven-year legal battle, but its defunding has halted the distribution of checks to affected students. Advocacy groups claim that the payouts are being delayed and may never be fulfilled.

The Trump administration’s actions have also impacted other companies ordered to compensate consumers, including Block (parent company of Cash App), TD Bank, and Honda. Without authorization from the CFPB, these payments cannot proceed. The agency requires analysis from an outside firm to determine how the payouts should be distributed, but this process has been halted due to lack of funding.

The CFPB had previously returned $21 billion to consumers through compensation programs since its inception in 2013. The agency’s current funding situation raises concerns about whether it will continue to operate effectively and fulfill its obligations to protect consumers.

As the situation unfolds, experts warn that the delayed payouts could have significant consequences for those affected by the companies’ actions. The CFPB’s leadership has stated that the agency will continue to exist in some form despite the defunding, but the future of these compensation programs remains uncertain.

Source: https://www.reuters.com/world/us/consumer-watchdog-payouts-limbo-agency-defanged-by-trump-administration-2025-03-03