The Consumer Financial Protection Bureau (CFPB) is facing renewed scrutiny over its shrinking authority to supervise nonbank financial firms, as consumer debt surges and regulatory protections falter.

Industry groups, including the U.S. Chamber of Commerce, are backing a 2020 policy change made under the Trump administration that limits the CFPB’s power to monitor companies that pose a risk to consumers. The rollback, now at the center of a legal challenge, significantly narrows the Bureau’s ability to proactively supervise nonbank entities—such as credit repair firms, payday lenders, and fintech apps—unless the agency can prove a pattern of consumer harm on a case-by-case basis.

Supporters of the rollback argue that expanded oversight is unnecessary and overly burdensome. Opponents say it’s a dangerous retreat from the CFPB’s founding mission.

“The ability to supervise harmful actors before they cause widespread damage is one of the core functions of the CFPB,” said a consumer protection attorney familiar with the case. “Taking that away is like waiting for a fire to spread before sending in the fire department.”

According to a Bloomberg Law report, the rollback has already resulted in reduced scrutiny for several high-risk sectors, particularly credit repair companies and high-interest lenders that often operate in underserved or financially vulnerable communities.

A recent NBC News investigation underscored the broader consequences of this regulatory shift. As federal protections recede, nonbank lenders and alternative credit providers are expanding rapidly—often with little accountability. Many of these companies target borrowers with damaged credit, offering products that appear helpful but can lead to deeper financial distress.

At the same time, data from the Federal Reserve shows that household debt in the United States has reached all-time highs, with delinquencies on credit cards and auto loans rising faster than expected in 2024 and early 2025.