by Andy Kroll, ProPublica
In mid-July testimony before Congress, Russell Vought boasted that, as the acting head of the Consumer Financial Protection Bureau, he’d refashioned the agency’s approach to pursuing banks and other financial companies accused of exploiting Americans — the role Congress had created for the agency after the 2008 economic crash.
Vought had spent the first 18 months of the new Trump administration trying to dismantle the bureau, much as he and other appointees had done with the U.S. Agency for International Development. At CFPB, he’d ordered mass layoffs, tried to choke off the bureau’s funding and ended the lease on its headquarters, attempting to make good on his vow to put civil servants “in trauma.” But federal courts blocked Vought’s efforts to close the CFPB, with a judge at one point saying the administration had acted with “complete disregard” for Congress.
So Vought, who is one of President Donald Trump’s top advisers, switched tactics: If there had to be a watchdog, theirs would be more of a golden retriever, friendlier to industry and less aggressive. Vought had accused the bureau of “thuggery” in the past, and said the “new” CFPB would focus on deregulation, embrace “humility” and adopt a “collaborative approach” to its dealings with companies that harm consumers.
As evidence of the success of this new approach, Vought singled out one company by name in his testimony, a buzzy startup called Bilt. The company, which offers credit cards used to make rent and mortgage payments, had fumbled a critical transition, leading to confusion and financial stress for its customers.
The Trump-era CFPB took a different tack. “We reached out to the company,” Vought told Congress, “and before it got to the adversarial part of the process, they were able to fix their issues.” The CFPB even posted a feel-good statement on its website, touting its new approach and telling consumers that information provided by Bilt “appears to show” the firm was “back on track.”
Yet two weeks after Vought’s testimony, Bilt failed customers again. This time, Bilt cardholders received mistaken debt collection notices and saw their credit scores go down as a result, sparking more embarrassing news stories and angry complaints. It was Bilt’s second fiasco in six months, and as its customers scrambled to understand what had gone wrong, the CFPB was nowhere to be found.
The Bilt controversy offered an early test of CFPB’s new approach, and the results suggest that an ask-nicely strategy to consumer protection isn’t likely to protect consumers. ProPublica sent the CFPB a detailed set of questions about its handling of the Bilt complaints; the bureau did not respond.
“What we saw Vought do with Bilt is innovative — and I don’t mean that as a compliment,” said Mike Pierce, a former CFPB official who runs the consumer advocacy group Protect Borrowers.
A Rocky Transition
Bilt’s business rests on a simple premise: Consumers should build credit and earn rewards for what’s typically their single biggest expense — their rent or mortgage payment. Founded in 2021, Bilt says it has 7 million customers and has raised nearly $1 billion in venture capital investments, at a $10.75 billion valuation.
Earlier this year, Bilt suffered a serious crisis. The startup had signed a seven-year partnership with Wells Fargo to offer Bilt-branded credit cards that could be used to pay rent. But revenue fell short of Wells Fargo’s projections, and the bank was losing so much money — as much as $10 million a month, according to The Wall Street Journal — that it ended its partnership with Bilt four years early. In February, Bilt relaunched its credit cards with new financial partners, but the rollout of “Bilt 2.0” was a debacle.
Customers said their rent payments were paid late, double-charged or not paid at all. Their cards were inexplicably frozen. Bilt’s customer support department struggled to keep up as tens of thousands of messages poured in. In March, the consumer group Protect Borrowers sent a letter to the CFPB demanding “immediate action.” Sen. Elizabeth Warren, D-Mass., wrote to Bilt, pointing out a 1,300% increase in complaints about the company submitted to the CFPB in February.
“Air Cover for the Company”
The law that established the CFPB, the Dodd-Frank Act of 2010, envisioned two tracks for the bureau’s work: a confidential supervision track, where employees periodically visit banks to monitor business practices, and a public enforcement track, where CFPB lawyers pursue lawsuits or consent decrees.
The Trump-era CFPB took neither of these tracks in response to Bilt’s first incident. A senior political appointee and Vought aide, Victoria Dorfman, took the lead in contacting Bilt. Having political appointees lead this process, instead of nonpartisan career executives, was “abnormal” for the CFPB “but is becoming normal” under the Trump administration, a current CFPB staffer told ProPublica.
Austin Hinkle, a former supervision lawyer and section chief at the CFPB, said understanding what caused the issue is complicated — and arguably just as important as fixing it. “The press release just looks like they’re providing air cover for the company without directing real fixes or systematic changes,” Hinkle said.
The lighter touch appears to be a hallmark of the Vought-era bureau. It has brought just one enforcement action since Trump took office, ending with a consent decree and a civil penalty of $1, while dismissing or resolving dozens of cases brought during previous administrations. A current CFPB staffer told ProPublica that the number of policy attorneys had shrunk from typically 40 to 50 lawyers down to five.
“Sent Me Into a Panic”
Roughly two weeks after Vought’s testimony, Bilt customer Jordan Carey received an alert that his credit score had dropped 50 points in a single day after a debt collector reported a supposed long-overdue payment tied to Bilt. Nearly 1,900 of Bilt’s customers received similar mistaken notices.
Hinkle said the more recent Bilt problem was the kind of situation the CFPB’s previous oversight model could’ve prevented or identified more quickly. “The fact that there’s a seemingly related problem popping up now suggests to me that the normal supervisory process didn’t work here,” he said. The CFPB has not made a public statement since Bilt’s second breakdown.
This story was originally published by ProPublica.
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