Senator Catherine Cortez Masto (D-NV) introduced a bill in the Senate on March 30 that would provide incentives for whistleblowers to come forward to the Consumer Financial Protection Bureau (CFPB) to report fraud against consumers and assist in sanctioning. The Financial Compensation for CFPB Whistleblowers Act follows much of the framework and structure of the highly regarded whistleblower provisions of the Dodd-Frank Act which established the whistleblower program of the Securities Exchange Commission (SEC). Companion legislation is being introduced in the U.S. House of Representatives by Congressman Al Green (D-Texas-09).
Whistleblower advocates have heralded the proposed legislation for following existing best practices and proven measures. Siri Nelson, Executive Director of the National Whistleblower Center, said that “with the CFPB whistleblower bill, Congress could mobilize essential whistleblowers who stop fraud against consumers – saving the everyday person from being ripped off.” She added that “The Dodd-Frank Act has provided fantastic tools to protect investors. Whistleblowers have returned billions to help make sure people feel comfortable buying and selling stock. Consumers deserve the same benefit.”
In 2022 the CFPB shared a blog post announcing the agency’s support for National Whistleblower Day. In the 2022 statement, the agency pointed out that “former CFPB Director Kathleen Kraninger took the important step of engaging with Congress on a proposal for legislation that would similarly authorize the CFPB to award whistleblowers who report violations of Federal consumer financial law that lead to a successful enforcement action.” The agency acknowledged that “although the CFPB does not have such authority now, it welcomes whistleblowers to report potential law violations to help inform the CFPB’s work.”
The agency additionally declared that “whistleblowers help the CFPB protect consumers and support the rule of law.” And that “the CFPB has welcomed whistleblower allegations since its inception and continues to take concrete steps to ensure that whistleblowers are supported and protected.”
As stated in Senator Cortez Masto’s press release, the Senator believes that “Whistleblowers play a critical role by reporting wrongdoing and fraud schemes targeting our communities.” The bill’s sponsor in the House, Congressman Green, added “I am proud to reintroduce the Financial Compensation for Consumer Financial Protection Bureau (CFPB) Whistleblowers Act together with Senator Catherine Cortez Masto…The recent bank failures and volatility in our financial system have reaffirmed the importance of transparency and accountability in our economy.”
According to the press release, Senator Sherrod Brown (D-OH) Chairman of Senate Committee on Banking, Housing, and Urban Affairs and co-sponsor of the legislation, emphasized the importance of whistleblowers. “Whistleblowers are essential to our democracy… [they] risk their career and their reputation to reveal corruption and bad actors seeking to exploit consumers and our government. We must do more to protect whistleblowers so they feel safe coming forward to expose corporate malfeasance. This legislation does just that by protecting whistleblowers from retaliation and incentivizing them to come forward with their information.”
Although The Financial Compensation for CFPB Whistleblowers Act has yet to receive any movement to-date in Congress, should it become law in its current form, the gaps for whistleblowers that the CFPB itself identified could be fixed. Bringing a Dodd-Frank style whistleblower regime to the CFPB would be a boon to consumers around the country and a deterrent to future fraudulent activity.
