State Series: Financial Consumer Protections

KPMG Regulatory Insights

Fair and Responsible: With federal policy and regulatory changes, there is growing uncertainty as to what/if a new standard will take shape or the role that states may have to help set/enforce it.
Increased Lending Safeguards: Anticipate a continued state focus on lending products and services.
Enforcement Efforts: State AGs are expected to intensify activity across a wider range of financial products and services and across an array of providers; Expect increased collaboration through multi-state investigations.

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August 2025

With federal changes (inclusive of changes to the CFPB and the issuance of Executive Orders on "debanking" and "disparate impact"), states have introduced and pursued an array of consumer financial protections through legislative and regulatory actions, including unfair or deceptive acts or practices and safeguards for consumer credit.

State attorneys general (AGs) are taking an increasing and more active role in the enforcement of consumer financial protections, including increased coordination among states and with federal agencies to share information and enhance efficiency and consistency.

Notable state activity in 2025 includes:

Legislative Focus (e.g., usury laws, debt collection, and small-dollar lending)
Enforcement Focus (e.g., novel products, algorithmic bias, multi-state coordination)

In 2025, states have introduced bills and/or enacted new laws and regulations to strengthen responsible practices in the offering and delivery of financial products and services to protect consumers. Examples of recent areas of focus include:

Areas of Focus
Area of Focus	Description/Examples
Unfair or Deceptive Practices	Requirements for clear and conspicuous disclosure of the nature, purpose, and amount of fees, including “total price”, mandatory and optional fees, refund policies Limitations on select fees, including interchange fees (e.g., taxes, tips, charitable contribution) and ATM fees
Usury Laws; Interest Rates	Renewed interest in the opt-out provisions available to states under the DIDMCA (Depository Institutions Deregulation and Monetary Control Act) Anti-evasion protections for usury laws Linking interest rates to floating rate formulas tied to economic indicators rather than static numbers
Debt Collection	Expanded scope of fair debt collection practices laws to include additional types of debt (e.g., CA)
Credit Reporting	Disclosures associated with the use of “trigger leads” derived from consumer report inquiries by mortgage companies (e.g., AR, GA) Prohibitions or restrictions on medical debt reporting to consumer credit reporting agencies (across multiple states, including ME and OR)
“Debanking”	Prohibitions against financial institutions denying or canceling services based on factors such as political opinions, religious beliefs, lawful business activities or non-risk-based criteria (e.g., AZ, GA, ID, IN, IA, KY, LA, SD)
Small-Dollar Lending	New rules on small-dollar loans, including caps on interest rates (e.g., CA) Buy Now, Pay Later rules enacted or updated guidance (e.g., CA, NY, MA, TX)
Use of AI	Restrictions on use of automated decision-making tools/systems for lending practices (e.g., RI, NY)

In 2025, state AGs have ramped up enforcement activity in financial services consumer protection, partly in response to shifts in federal priorities/activity as well as to influence policy at both the state and federal levels. Examples of recent areas of focus include:

Areas of Focus
Area of Focus	Description/Examples of Cases
Novel Products and Services	Characterizing certain non-credit products as loans, such as fees associated with earned wage access products determined to be interest; buy-now-pay-later products; lease to own arrangements; loans disguised as purchase of future revenues (e.g., NY, DC)
Elder Fraud	Investigating and coordinating cross-agency efforts to prevent financial exploitation of seniors, including fraud and scams (e.g., VA, CT)
Algorithmic Bias	Applying existing consumer protection authorities (federal and state) to enforce anti-bias/fair lending laws when decision are made using AI, automated decision-making or other advanced technologies, especially with regard to lending and pricing of products and services (e.g., CA, NJ, MA)
Multi-State; State-Federal Coordination	Coordinating with other states and/or federal agencies (e.g., FTC, DOJ) to address consumer protection issues, such as: VA/DOJ Task Force to investigate allegations of debanking Multi-state Consortium to collaborate and unify privacy enforcement 50-state participation in Anti-Robocall Litigation Task Force 23-state coalition to oppose CFPB defunding or dismantling