While federal consumer financial enforcement and regulation in the second Trump administration remain in transition, what is becoming clear is that state attorneys general and state financial regulators are stepping in to fill gaps left by federal regulators.
In this Update, we address Texas, where consumer financial protection operates through a complex interplay between state regulators and federal oversight. Understanding how Texas state authorities act independently and interact with the Consumer Financial Protection Bureau (CFPB or Bureau) and Federal Trade Commission (FTC) is crucial for companies offering consumer financial products and services in the Lone Star State.
Federal Consumer Financial Protection Authority — CFPB and FTC
Federal consumer financial protection operates through two primary agencies with overlapping but distinct authorities. The CFPB maintains broad supervisory and enforcement authority over providers of consumer financial products and services, including banks, credit unions, and nonbank companies such as mortgage lenders, payday lenders, and debt collectors.1 The FTC plays a complementary role but has broader authority extending beyond financial services to encompass general consumer protection, data privacy, and deceptive business practices at large. Unlike the CFPB’s sector-specific focus, the FTC’s mandate covers virtually any business practice affecting consumers, albeit with a significant carveout for banks and credit unions.
In January 2025, near the end of the Biden administration, the CFPB released comprehensive guidance to enable state enforcement, including “Strengthening State Level Consumer Protections”2 and “Compendium of Recent CFPB Guidance.”3 Then-Director Rohit Chopra and General Counsel Seth Frotman also published “State Enforcement as a Federal Legislative Tool” in the Harvard Journal on Legislation.4 These materials appear designed to provide states with a detailed roadmap for pursuing consumer financial enforcement with or without federal support and were likely released out of concern that the second Trump administration would pull back from aggressive consumer financial enforcement.
Whatever the purpose, the second Trump administration has in fact confirmed a sharp pivot toward federalism in its approach to consumer financial enforcement. Specifically, the CFPB issued a memorandum dated April 2025 articulating its supervision and enforcement priorities and stating that the Bureau will “shift resources away from enforcement and supervision that can be done by the States” and “deprioritize supervision where States have and exercise ample regulatory and supervisory authority.”5 That is a significant change from the approach of both the Biden and first Trump administrations when the CFPB often took the lead on consumer financial enforcement, including in coordinated matters with the states. The Bureau’s current priorities appear intended to put the states at the forefront of consumer financial protection, with the CFPB playing a supporting role.
Texas’ Significance and State Consumer Financial Protection Framework
Texas occupies a central position in the national consumer financial protection landscape, making it a critical case study for both state-federal regulatory coordination and independent consumer financial protection. Texas is the second-largest state by population (over 30 million residents) and economy (gross domestic product of approximately $2.7 trillion in 2024). It has astonishing economic diversity. Beyond being home to numerous major financial institutions and regional banks, the state’s energy sector, technology hubs, agricultural strength, and border commerce with Mexico create complex financial service needs spanning traditional banking, fintech innovation, and cross-border payments.6 This economic complexity generates complicated consumer protection challenges requiring sophisticated regulatory responses.
The state has a three-tier financial regulatory framework covering banking, nonbank lending, and consumer protection enforcement. The Texas Department of Banking serves as the primary prudential regulator for state-chartered banks, trust companies, and certain financial technology companies. The Department of Banking conducts safety and soundness examinations, licensing, and enforcement actions for state-chartered institutions throughout Texas.7
The Office of Consumer Credit Commissioner (OCCC) oversees the nonbank lending sector, including payday lenders, installment lenders, auto title lenders, mortgage companies, and consumer finance companies. The OCCC licenses thousands of entities across Texas and regulates billions in consumer lending annually.8
The Texas Attorney General’s Consumer Protection Division provides the enforcement mettle through its authority to investigate and prosecute violations of the Texas Deceptive Trade Practices — Consumer Protection Act (DTPA). The Texas Attorney General’s office has broad investigative powers, civil penalty authority of up to $10,000 per violation, and the ability to seek injunctive relief and consumer restitution.9 It has recovered billions for Texas consumers in enforcement actions over recent years, including a $1.375 billion Google settlement, a $1.4 billion Meta settlement, and participation in multistate settlements such as the $600 million Equifax settlement.10
In addition to Texas’ state regulatory framework, the state also works collaboratively with federal agencies, notably the FTC, which awarded Attorney General Ken Paxton’s Consumer Protection Division its Partner Award for outstanding collaborative work to combat fraud and deception.11 Texas has shown it has the ability to conduct major enforcement actions on its own as well as collaborate effectively with federal agencies when beneficial to Texas consumers.
Texas’ Consumer Financial Legal Authorities
Texas possesses robust consumer protection authority through the DTPA, which prohibits any false, misleading, or deceptive acts or practices in the conduct of any trade or commerce, including financial services. The DTPA contains an expansive, yet nonexhaustive, list of prohibited practices and broad authority to police unconscionable conduct. It prohibits, inter alia, misrepresenting the characteristics, benefits, or sponsorship of goods or services; advertising goods or services with intent not to sell them as advertised; and engaging in unconscionable actions or courses of action.12 The DTPA’s broad scope allows Texas to address emerging financial practices that may not be covered by specific federal regulations, providing flexibility to respond to new forms of consumer harm in the evolving financial services landscape, including in areas such as cryptocurrency, fintech innovations, and digital payment systems.
The Attorney General can seek injunctive relief, monetary penalties, and consumer restitution. For knowing violations, the DTPA allows up to three times economic damages plus attorney’s fees. Moreover, the DTPA provides for private enforcement, allowing individual consumers and businesses to bring lawsuits for DTPA violations, including treble damages in some instances, and attorney’s fees available to prevailing plaintiffs, making private enforcement economically viable.13
Texas consumer financial services law also continues to evolve in idiosyncratic ways that bear careful monitoring. Texas, for example, has by far the most restrictive home equity lending laws in the country, codified in the state constitution.14 Texas statutes impose a general 10% usury cap,15 subject to a wide variety of exceptions and optional rates, that can result in unexpected licensing requirements. It is one of a handful of states that require state registration to act as a retail installment seller.16 And most recently, the legislature voted overwhelmingly to adopt a disclosure, registration, and regulation regime for providers of “commercial sales-based financing” products — including authorizing regulations to prohibit “unfair, deceptive, or abusive” acts or practices in the industry, following the federal Consumer Financial Protection Act’s definitions of those standards.17
Texas Consumer Enforcement Outcomes
This authority has yielded significant enforcement outcomes. Working with other states, Texas was part of a $575 million multistate settlement with Wells Fargo in 2018 related to the bank’s alleged creation of unauthorized bank accounts.18 It was also part of a settlement against the major credit reporting agencies for claims relating to their handling of consumer disputes and the accuracy of credit reports.19 And in 2024 it filed a case jointly with the CFPB against a real estate developer who targeted Spanish-speaking buyers and borrowers for what the Texas Attorney General charged were “predatory lending practices,” allegedly “churning land purchasers through a foreclosure mill” — with the result, according to Attorney General Paxton, of “attracting and enabling illegal alien settlement in the state of Texas and distressing neighboring cities and school districts.”20
Texas has also demonstrated that it can go it alone. Recently, the state has achieved substantial recoveries in consumer protection and data privacy enforcement actions against major technology companies. In July 2024, the Texas Attorney General entered into a settlement with Meta for $1.4 billion over allegations concerning the capture of biometric data of Texans without obtaining their informed consent as required by the state’s Capture or Use of Biometric Identifier Act.21 In May 2025, Texas secured a $1.375 billion settlement with Google for violations related to alleged unauthorized location tracking, incognito browsing data collection, and biometric data capture. Notably, both the Meta and Google cases included DTPA claims in addition to alleged privacy law violations.22 And Texas has also issued civil investigative demands to a number of major banks, announcing public investigations to determine whether the banks engaged in potential consumer protection violations based on alleged deceptive trade practices tied to environmental, social, and governance concerns.23
Enhanced State Authority Under Federal Law
Beyond its state-level authorities, Texas possesses the ability — as do all states — to enforce certain federal consumer financial laws. Specifically, Section 1042 of the Consumer Financial Protection Act (CFPA) explicitly authorizes states to enforce the provisions of the CFPA and the regulations issued thereunder, including the federal prohibition on unfair, deceptive, or abusive acts or practices (UDAAP) in the offering or provision of consumer financial products or services. While Texas has not yet prominently cited federal UDAAP law in consumer financial cases, instead relying primarily on its broad state DTPA authority, this federal authority remains available, and other states have used it frequently in pursuing consumer enforcement actions.
While Section 1042’s grant of UDAAP authority to the states has been widely accepted, whether the states have authority to enforce the entire array of consumer financial statutes entrusted to the CFPB by the CFPA is less clear. The Biden-era CFPB issued a May 26, 2022 interpretive rule stating that CFPA Section 1036(a)(1)(A) makes it unlawful for covered persons or service providers to violate “any” federal consumer financial law and that states can use Section 1042 authority to enforce violations of all 18 enumerated consumer financial laws entrusted to the CFPB by the Dodd-Frank Wall Street Reform and Consumer Protection Act, CFPB rules, and CFPB orders.24 The federal district court in Pennsylvania by Shapiro v. Mariner Finance, LLC validated this interpretation, holding that Section 1042 empowers states to bring such varied federal law enforcement claims.25
The current CFPB, however, has explicitly disavowed the Biden-era interpretive rule and, by implication, made clear its disagreement with the Mariner Finance ruling. Specifically, in May 2025, the CFPB rescinded the Biden-era interpretive rule, stating that “[s]tate authority under section 1042 is therefore limited to actions to enforce the CFPA” rather than all federal consumer financial laws. The Bureau emphasized that “[i]f Congress had intended the CFPA to permit States to enforce any provision of any Federal consumer financial law, it would have said so explicitly.”26
Worth mentioning, however, is that neither the Biden-era nor current CFPB guidance is the last word on the topic as both are just interpretations. Ultimately, the ability of the states to exercise broader authority under the CFPA will depend on what courts — like the one in Mariner Finance — decide.
Conclusion
The current federal deference to the states on consumer financial enforcement creates both opportunities and imperatives for Texas’ regulatory framework. With the CFPB explicitly shifting its resources away from enforcement that states can handle, Texas finds itself uniquely positioned to lead national consumer financial protection efforts during this administration.
Texas’ regulatory infrastructure — spanning the Department of Banking, OCCC, and Attorney General’s office — provides comprehensive coverage for consumers. Further, the state’s broad DTPA authority, combined with its ability to enforce federal consumer financial laws under Section 1042, creates a powerful enforcement toolkit that can address both traditional violations and emerging fintech challenges. The Meta and Google settlements demonstrate Texas’ ability and readiness to pursue enforcement actions independently and recover redress amounts on par with (and sometimes in excess of) those obtained by federal agencies or multistate coalitions.
For financial institutions operating in Texas, this shift demands recalibrated compliance strategies. Given this enforcement shift and Texas’ demonstrated willingness to pursue major enforcement actions independently, companies must ensure compliance not only with federal requirements but also with Texas’ DTPA and privacy laws, at a minimum. Texas’ enforcement pattern suggests the state will likely pursue violations that previously would have been handled by federal agencies, particularly in areas like digital payments, cryptocurrency lending, and buy-now-pay-later services where federal guidance remains limited. The state’s willingness to act independently, combined with its economic significance and established enforcement track record, makes Texas compliance a national priority rather than merely a state consideration.
Looking ahead, Texas’ approach may serve as a model for other states stepping into federal enforcement gaps. Financial institutions should anticipate that Texas will continue expanding its enforcement reach, particularly as the state builds on its demonstrated capabilities and the federal government continues its federalism-focused approach to consumer financial regulation.
1 Consumer Financial Protection Bureau, Institutions subject to CFPB supervisory authority, https://www.consumerfinance.gov/compliance/supervision-examinations/institutions/.
2 Consumer Financial Protection Bureau, Strengthening State-Level Consumer Protections: Promoting Consumer Protection Federalism (Jan. 2025), https://files.consumerfinance.gov/f/documents/cfpb_strengthening-state-level-consumer-protections_2025-01.pdf.
3 Consumer Financial Protection Bureau, Compendium of Recent CFPB Guidance (Jan. 2025), https://files.consumerfinance.gov/f/documents/cfpb_guidance-compendium_2025-01.pdf.
4 Rohit Chopra & Seth Frotman, State Enforcement As A Federal Legislative Tool, 62 Harv. J. on Legis. (2025), available at https://journals.law.harvard.edu/jol/2025/01/15/state-enforcement-as-a-federal-legislative-tool/.
5 Consumer Financial Protection Bureau, 2025 Supervision and Enforcement Priorities (Apr. 16, 2025), Mark R. Paoletta, Chief Legal Officer (internal memorandum not publicly released; contents reported in multiple secondary sources).
6 Texas Comptroller of Public Accounts, Statewide Report 2024 Regional Report (2024), https://comptroller.texas.gov/economy/economic-data/regions/2024/statewide.php (last visited June 2025); U.S. Bureau of Economic Analysis, Gross Domestic Product: All Industry Total in Texas, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/TXNGSP (last visited June 2025).
7 Texas Department of Banking, Our Mission and Statutory Duties, https://www.dob.texas.gov/ (last visited June 2025); Texas Department of Banking, Texas State-Chartered Banks & Holding Companies, https://www.dob.texas.gov/banks-trust-companies/texas-state-chartered-banks-holding-companies (last visited June 2025).
8 Texas Office of Consumer Credit Commissioner, About Us, https://occc.texas.gov/about-us (last visited June 2025); Texas Office of Consumer Credit Commissioner, Regulated Industries, https://occc.texas.gov/industry (last visited June 2025).
9 Office of the Attorney General of Texas, Consumer Rights, https://www.texasattorneygeneral.gov/consumer-protection/file-consumer-complaint/consumer-rights (last visited June 2025); Tex. Bus. & Com. Code ch. 17 (Texas Deceptive Trade Practices-Consumer Protection Act), https://statutes.capitol.texas.gov/Docs/BC/htm/BC.17.htm.
10 Office of the Attorney General of Texas, Attorney General Ken Paxton Secures $1.4 Billion Settlement with Meta Over Its Unauthorized Capture of Personal Biometric Data In Largest Settlement Ever Obtained From An Action Brought By A Single State (July 30, 2024), https://www.texasattorneygeneral.gov/news/releases/attorney-general-ken-paxton-secures-14-billion-settlement-meta-over-its-unauthorized-capture; Office of the Attorney General of Texas, Attorney General Ken Paxton Secures Historic $1.375 Billion Settlement with Google Related to Texans’ Data Privacy Rights (May 9, 2025), https://www.texasattorneygeneral.gov/news/releases/attorney-general-ken-paxton-secures-historic-1375-billion-settlement-google-related-texans-data; Office of the Attorney General of Texas, AG Paxton Announces Historic $600 Million Data Breach Settlement with Equifax (July 22, 2019), https://www.texasattorneygeneral.gov/news/releases/ag-paxton-announces-historic-600-million-data-breach-settlement-equifax.
11 Office of the Attorney General of Texas, AG Paxton's Consumer Protection Division Wins FTC’s Partner Award for Outstanding Collaborative Work (Oct. 17, 2017), https://www.oag.state.tx.us/news/releases/ag-paxtons-consumer-protection-division-wins-ftcs-partner-award-outstanding-collaborative-work.
12 Tex. Bus. & Com. Code § 17.46 (listing nonexhaustive prohibited practices protected against false, misleading, or deceptive acts or practices), https://statutes.capitol.texas.gov/Docs/BC/htm/BC.17.htm#17.46; § 17.45(5) (unconscionable conduct provision), https://statutes.capitol.texas.gov/Docs/BC/htm/BC.17.htm#17.45.
13 Tex. Bus. & Com. Code § § 17.50 (private enforcement and attorney’s fees provisions), https://statutes.capitol.texas.gov/Docs/BC/htm/BC.17.htm#17.50.
14 See Tex. Const. art. XVI, § 50(a)(6).
15 See Tex. Fin. Code § 302.001(b).
16 See Tex. Fin. Code § 302.001.
17 See Tex. H.B. 700 (enacted May 31, 2025). The Governor has until June 22, 2025 to decide whether to veto the legislation.
18 Office of the Attorney General of Texas, AG Paxton Announces $575 Million Settlement with Wells Fargo for Violating Consumer Protection Laws (Dec. 28, 2018), https://www.texasattorneygeneral.gov/news/releases/ag-paxton-announces-575-million-settlement-wells-fargo-violating-consumer-protection-laws.
19 Office of the Attorney General of Texas, Attorney General Paxton Announces $6 Million Settlement with Credit Reporting Agencies (May 28, 2015), https://www.texasattorneygeneral.gov/news/releases/attorney-general-paxton-announces-6-million-settlement-credit-reporting-agencies.
20 Office of the Attorney General of Texas, Attorney General Ken Paxton Sues Colony Ridge for Fraudulent Practices That Enabled Major Problematic Real Estate Development to Flourish (Mar. 14, 2024), https://www.texasattorneygeneral.gov/news/releases/attorney-general-ken-paxton-sues-colony-ridge-fraudulent-practices-enabled-major-problematic-real.
21 Office of the Attorney General of Texas, Attorney General Ken Paxton Secures $1.4 Billion Settlement with Meta Over Its Unauthorized Capture of Personal Biometric Data In Largest Settlement Ever Obtained From An Action Brought By A Single State (July 30, 2024), https://www.texasattorneygeneral.gov/news/releases/attorney-general-ken-paxton-secures-14-billion-settlement-meta-over-its-unauthorized-capture.
22 Office of the Attorney General of Texas, Attorney General Ken Paxton Secures Historic $1.375 Billion Settlement with Google Related to Texans’ Data Privacy Rights, https://www.texasattorneygeneral.gov/news/releases/attorney-general-ken-paxton-secures-historic-1375-billion-settlement-google-related-texans-data.
23 Office of the Attorney General of Texas, Paxton Launches Investigation Into Six Major Banks For Collusion-in-Lending Practices That Potentially Violate Consumer Protection Laws (Oct. 19, 2022), https://www.texasattorneygeneral.gov/news/releases/paxton-launches-investigation-six-major-banks-collusion-lending-practices-potentially-violate.
24 Authority of States to Enforce the Consumer Financial Protection Act of 2010, 87 Fed. Reg. 31940, 31941 (May 26, 2022), https://www.govinfo.gov/app/details/FR-2022-05-26/2022-11356.
25 Pennsylvania by Shapiro v. Mariner Fin., LLC, 711 F. Supp. 3d 463, 483 (E.D. Pa. 2024).
26 Authority of States to Enforce the Consumer Financial Protection Act of 2010; Rescission, 90 Fed. Reg. 20565, 20566 (May 15, 2025), https://www.federalregister.gov/documents/2025/05/15/2025-08641/authority-of-states-to-enforce-the-consumer-financial-protection-act-of-2010-rescission.
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