State attorneys general have long been on the front lines when it comes to protecting families and honest businesses from fraud and misconduct. But recently, federal government agencies in Washington, DC, are looking to use questionable legal tactics to delete state consumer laws. Progressive state attorneys general are pushing back on this power grab.

Whether it’s laws governing corporations or contracts, our market system relies on state law. States are also laboratories of democracy, allowing different states to adapt their rules to their own local markets and preferences.  

Rather than actually enforcing federal laws on the books, bureaucrats in Washington are looking to strip states of their authorities. Here are just a few examples: 

Data Protection and Privacy

When we apply for a job or rental housing, employers and landlords often order a background report on an applicant before making a decision. State governments have passed a series of laws to regulate this kind of activity to protect privacy and make sure the process is fair. States have also put into place a range of other laws to safeguard our data from abuse and misuse. For example, many states have enacted laws prohibiting medical information and medical bills on credit reports. 

But recently, the Consumer Financial Protection Bureau issued a notice that seeks to delete these state laws, by claiming that the Fair Credit Reporting Act broadly “preempts” these protections. 

Gambling

States have long regulated gambling, including wagers on sporting events, games of chance, and lotteries. Last month, an agency that regulates commodity exchanges and derivatives filed a series of lawsuits against states that regulate gambling.  

Rather than state their views at the invitation of a court, the Commodity Futures Trading Commission sued several states to block enforcement of state gambling laws on websites that facilitate betting on sports and other events. 

Loans, Payments, and Fees

States play a major role in licensing mortgage lenders and setting guidelines for closing a mortgage. Recently, an obscure federal agency known as the Office of the Comptroller of the Currency has sought to eliminate state laws that ensure that mortgage borrowers are credited with interest on their mortgage escrow accounts – these are the accounts that are funded to make certain payments like property taxes. More recently, the Office of the Comptroller of the Currency wants to block an Illinois law that eliminates bank fees on tips paid to workers. 

Ironically, the Office of the Comptroller of the Currency engaged in abusive preemption of state laws protecting the public from predatory mortgage lending. The Financial Crisis Inquiry Commission highlighted this abuse as a contributing factor the subprime mortgage meltdown and the resulting foreclosure crisis. 

Across the board, progressive state attorneys general are fighting back against some of these egregious power grabs. They are successfully stopping regulatory overreach that seeks to strip states and consumers of their rights. In several of these instances, their work is earning bipartisan support.

As federal agencies in the current administration continue to launch regulatory assaults on consumers and businesses, state attorneys general will act to block these illegal actions. 

Rohit Chopra is the former Director of the Consumer Financial Protection Bureau and a former Commissioner on the Federal Trade Commission. He serves as a senior adviser to the Progressive State Leaders Committee.