Shuttering the Consumer Financial Protection Bureau will leave service members who rely on the agency’s accountability initiatives less guarded from career-ending scams and financial crimes, Sen. Tammy Duckworth and other Democratic lawmakers said in a letter Thursday to the bureau’s new acting head.
Three members of the U.S. Senate Committee on Veterans’ Affairs urged Office of Management and Budget Director Russell Vought to restart CFPB operations nearly two weeks after he issued a dozen directives to employees, effectively cutting the bureau off at the knees.
“These short-sighted actions leave service members and Veterans — who are among the likeliest group to be targeted for financial crimes — vulnerable to fraud and abuse,” read the letter, which was sent to Vought on Thursday morning and shared first with NBC News.
The letter was signed by Duckworth, D-Ill.; Sen. Richard Blumenthal, D-Conn.; and Sen. Mazie Hirono, D-Hawaii.
In an interview with NBC News, Duckworth said young service members are targeted by bad actors, such as payday lenders and disreputable car dealers, particularly because military members’ wages can be garnished. Young service members, she added, are also more vulnerable because they are often separated from their support network and may not be wise to such schemes.
“Once you enlist in the military, they know you’re going to have that job for four years or six years, and then they can just garner your salary,” Duckworth said. “They are the preferred targets.”
Since its inception in 2011, the CFPB said its enforcement actions in 42 cases involving harm to service members and veterans have delivered $183 million in redress to victims.
The bureau is responsible for taking judicial actions when federal laws meant to protect service members — including the Military Lending Act, designed to deter predatory lending practices — are violated.
The bureau also participates in the Veteran Scam and Fraud Evasion Task Force, which then-President Joe Biden launched in 2023 to crack down on fraud and scams perpetrated against veterans, service members and their families.
The safeguards are important, the lawmakers said, because identity theft or bankruptcy can mean a loss of a security clearance or the end of a service member’s career. They’re also necessary, the group said, as fraud and scams cost the military community millions of dollars each year.
The Federal Trade Commission said it received 163,000 fraud reports from veterans and nearly 13,000 fraud reports from active-duty service members from 2015 to 2019.
In 2022, frauds and scams cost the military community more than $414 million, an increase of more than 50% from the previous year, according to the FTC. That grew to more than $470 million in 2023, the latest year with available FTC data.
“I think that you’re going to see these predators redouble their efforts,” Duckworth told NBC News. “We don’t have time to waste right now.”
Ending protections, Duckworth and the other legislators wrote, will lead to a “direct national security risk.”
Among Vought’s directives to employees on Feb. 8, he ordered them to immediately “cease all supervision and examination activity,” “cease all stakeholder engagement,” pause all pending investigations, not issue any public communications and pause “enforcement actions,” NBC News previously reported.
In a post on X that day, Vought said he had notified the Federal Reserve, which handles U.S. monetary policy, that “CFPB will not be taking its next draw of unappropriated funding because it is not ‘reasonably necessary’ to carry out its duties.”
“The Bureau’s current balance of $711.6 million is in fact excessive in the current fiscal environment,” Vought wrote. “This spigot, long contributing to CFPB’s unaccountability, is now being turned off.”
Last week, a U.S. district judge ruled that Vought could not yet terminate any CFPB employee without cause, tamper with records or reduce the amount of money available to the CFPB.
The order came after the National Treasury Employees Union, the CFPB Employee Association and other groups sued the CFPB and Vought. The judge said the order holds until the resolution of the plaintiffs’ motion for a temporary restraining order.
In their letter, the Democratic lawmakers called Vought’s actions “reckless obstruction” and asked him to reconsider.
“We know predatory actors will always be looking for opportunities to scam our Veterans, service members and their families from the benefits they have earned and deserve,” they wrote, “and your stop-work order is a green light directing them to their next projects.”
