The Community Financial Services Association of America (CFSA), a trade association for payday lenders, brought this case against the CFPB on the grounds that the regulator’s funding violated the appropriations clause of the US constitution.

The CFPB was created through the Dodd-Frank Act 2010. Unlike most US federal agencies that get their funding from Congress, the agency is funded by a capped sum provided by the Federal Reserve each year.

The case was brought to the court in October 2023, after a lower court ruled in favour of the CFSA.

The CFPB said in a statement: “For years, lawbreaking companies and Wall Street lobbyists have been scheming to defund essential consumer protection enforcement. The Supreme Court has rejected their radical theory that would have devastated the American financial markets. The Court repudiated the arguments of the payday loan lobby and made it clear that the CFPB is here to stay.

“Congress created the CFPB to be the primary federal watchdog protecting consumers from predatory and abusive practices in the financial sector. Since the CFPB opened its doors in 2011, it has delivered more than $20 billion in consumer relief to hundreds of millions of consumers and has handled more than 4 million consumer complaints."

US President Joe Biden said: “In the face of years of attacks from extreme Republicans and special interests, the court made clear that the CFPB’s funding authority is constitutional and that its strong record of consumer protection will not be undone.”

Elizabeth Warren, who originally proposed the agency before becoming a Senator, said on the decision: “The CFPB is here to stay. In a 7-2 decision, the Supreme Court followed the law and confirmed that the CFPB’s funding structure is constitutional. For the last decade, the consumer agency has fought the big banks and predatory lenders that try to cheat hardworking people. As of this week, the CFPB has returned more than $20 billion in ill-gotten funds to American families. This isn’t the last attack on the CFPB we’ll see from Wall Street, the banks, and their Republican allies.”