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ARTICLE · 27 JUNE 2018

SDNY Finds BCFP Structure Unconstitutional, Breaking With DC Circuit

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In a June 21, 2018 opinion, Judge Loretta Preska of the U.S. District Court for the Southern District of New York held that the structure of the Bureau of Consumer Financial Protection is unconstitutional.

United StatesConsumer Protection
Phillip Schulman
Phillip Schulman
James C. Williams
James C. Williams
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In a June 21, 2018 opinion, Judge Loretta Preska of the U.S. District Court for the Southern District of New York held that the structure of the Bureau of Consumer Financial Protection ("BCFP" or the "Bureau") is unconstitutional. This ruling is inconsistent with the D.C. Circuit's en banc decision in PHH Corp. v. CFPB ("PHH").

The case, CFPB v. RD Legal Funding, LLC, involves joint claims brought by the Bureau and the New York State Office of the Attorney General. RD Legal offers cash advances to consumers waiting on payouts from settlement agreements or judgments entered in their favor. The claims allege that the company defrauded 9/11 first responders and NFL retirees by misleading them regarding cash advances that were represented as valid sales but instead were loans made in violation of state usury law.

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