Imagine your business is under investigation. You spend hours of your time and tens of thousands of dollars answering questions and producing documents for investigators. Months pass before you find out what, if anything, you have done wrong. Meanwhile, your business fails.
Poorly justified and destructive investigations of ordinary people’s affairs are unfair and have no place in a free society. The Consumer Financial Protection Bureau (CFPB) is a serial violator of such fairness norms, initiating long fishing expeditions without explaining how their target violated the law. The Bureau has often initiated these investigations by issuing civil investigative demands (CIDs), a type of subpoena that requires recipients to produce evidence relevant to an investigation.
The Bureau’s CID practice is ripe for reform. This post, the second in a series on CFPB reform, surveys key proposals to curb the Bureau’s CID overreach.
Foundations of the CFPB’s CID Authority
The CFPB may issue a CID to anyone it “has reason to believe” has information “relevant to a violation.” The Dodd-Frank Act requires the Bureau’s CIDs to “state the nature of the conduct constituting the alleged violation” and “the provision of law applicable to such violation.” Recipients may petition the CFPB’s director to modify or set aside the CID.
Compared to search warrants, Supreme Court precedents set few limits on administrative subpoenas, such as CIDs. Investigators conducting a physical search must show probable cause to obtain a warrant, “particularly describing the place to be searched and the persons or things to be seized. But today’s Supreme Court requires only that administrative subpoenas be “reasonable,” meaning limited in scope, relevant, and not unreasonably burdensome.
The Court’s undemanding standards for administrative subpoenas are not applied stringently. Judges defer to the Bureau in challenges to CIDs. Courts accept boilerplate lists of laws and unhelpfully general descriptions of conduct rather than requiring the Bureau to give meaningful notice of what it is investigating.
Until the Supreme Court revisits the issue, CID reform must come from legislators.
Problems with the CFPB’s Exercise of CID Authority
The Bureau’s CIDs are often poorly justified and unreasonably costly.
Bureau CIDs tend to be overbroad, referring to possible violations of multiple federal laws, such as the Truth in Lending Act and/or “any other federal consumer financial law,” without citing specific provisions of any law. Recipients may struggle to understand what conduct is under investigation. The Bureau may ask about matters going back many years. Moreover, the Bureau rarely answers questions to clarify the demand’s scope.
Worse, the Bureau has issued CIDs to learn about a market or a business’s procedures, even when no violation of law is suspected. The Bureau also has used CIDs to review all of a business’s activity “because the target operates in a business that is disfavored by the Bureau (e.g., small dollar lending).”
CID recipients expend significant resources responding to the CIDs, sometimes enough to put them out of business. For a small business, costs may run over a hundred thousand dollars. Larger firms may incur over a million dollars in costs.
Bureau policies also discourage CID recipients from petitioning for relief. The Bureau keeps CIDs confidential but publicizes petitions. Petitions are rarely granted, and filing one jeopardizes the petitioner’s reputation with little chance of success.
Some dismiss these critiques, arguing that lawbreakers naturally seek to impede any investigation. In reality, regulated businesses fear retaliation for criticizing regulators or opposing regulators in litigation—frivolously or otherwise.
Moreover, the Bureau’s practices have been compared unfavorably to those of the DOJ, the FTC, or other agencies. The FTC staff itself recommended changes to the Bureau’s practice, as has the Arizona state attorney general.
Key Proposals for CID Reform
Recent testimony shows that the CFPB’s earlier attempts to address critiques by changing its CID practices have been ineffective. Statutory reforms are clearly necessary, and Congress should start with limits known to be workable in other investigative contexts.
One important reform would address overbroad CIDs by authorizing the Bureau to issue demands only when it has a reasonable suspicion that a violation has occurred, a standard derived from police stop-and-frisk searches and some subpoenas of personal information. Representatives Andy Barr (R‑KY), Vicente Gonzalez (D‑TX), and Jared Moskowitz (D‑FL) have introduced the Civil Investigative Demand Reform Act of 2025 (CIDRA), which would require CIDs to make “specific reference to particular facts,” nudging the standard upwards towards “reasonable suspicion.” Such a higher threshold would be good policy. If criminal investigators must show probable cause, a less stringent “reasonable suspicion” standard should be manageable for the CFPB.
Other reforms seek to reduce the burden of large-scale demands. For example, CIDRA stipulates that CIDs must be issued no later than six years after the alleged violation. Such a time limit should be workable: enforcers routinely contend with temporal limits such as statutes of limitations.
Other reforms aim to heighten the Bureau’s accountability on review. An independent arbiter—ideally, a judge outside the agency—should decide petitions, not the director or others involved in enforcement. Direct judicial review of petition denials also might buttress accountability. Currently, a CID recipient may only obtain judicial review if the CFPB sues to enforce a CID after the recipient refuses to comply.
CIDRA links provisions addressing burden and review. CIDRA would let petitioners challenge burdensome CIDs, or those that call for material that may be obtained elsewhere at less expense. And CIDRA would make the Bureau’s denial of a petition directly subject to judicial review on the petitioner’s initiative. This type of reform might signal to courts that legislators support less deferential CID review and improve petitioners’ chances of success.
Conclusion
The CFPB has indulged in significant CID overreach. Reforms such as requiring the Bureau to articulate facts to support a reasonable suspicion would be good policy (and might inform improving other agencies’ administrative subpoena practices).
However, CID reform addresses only a few of the CFPB’s problems. The first blog in this series discusses the Bureau’s flawed structure. Future blogs will address the quality of the Bureau’s economic analysis. Altogether, these problems are daunting: the best solution might be to dismantle the agency.