Against adam shift for conduct that misleads the american people. Watch live coverage of the house at noon eastern here on cspan. We take you live to testimony from Consumer FinancialProtection Bureau director khoep a. Hes testifying today on the Digital Economy a Consumer Protection before the House Financial Services committee. We join this in progress. Mr. Sherman credit repair scams are not just annoying television commercials. They charge you a lot of money. They just blanketly contest everything on your Credit Report. Your credit score goes up for a little while until they realize that most of those entries were accurate and it goes back down. What are you doing to deal with the scheme where you get your Credit Report improved for a little while . We are looking hard at all the ways in which consumer Credit Report issues can spawn scams. We have brought a number of Enforcement Actions here. We do work with the federal trade commission, state a. G. s to bring action. We dont want to play whackamole. We want to figure out whats the way that consumers themselves can know how they can dispute inaccurate information. We want to make sure that fraudsters are not parking for placing debt on Credit Reports that are not even owed. So there is a lot to work. And i know many on the committe mr. Sherman when they start advertising about percentage of the customers they improve the score for, they tphud should not be claiming temporary improvements. Lets see under section 1031 you are dealing with privacy, data aggregators, fin text are not fintechs are not subject to a lot of the supervision banks are. What steps are you taking to protect americans from these folks. Mr. Chopra we have started to put more familicies on nonbank supervision, especially these firms that touch sometimes millions and millions of consumers who have not been subject to similar supervision. We want to make sure that that abuse that you mentioned, or that its not a collected for one purpose but monetized for a completely different one. Its going to be a challenge. But we are starting by making sure we are targeting our supervisory resources properly. Mr. Sherman finally, i hope you would look at these forprofit debt relief agencies that keep you from talking to your bank first. The gentlemans time has expired. The gentleman from missouri, mr. Mr. Luetkemeyer thank you, mr. Chairman. Mr. Chopra, welcome. Last time you were here we discussed your schedule. The fact you dont meet with people from the industry. We showed your schedule to you. Made some comments about t we said we sent you a letter and asked to you fill in the blanks and tell us that you did meet with people in industry. You didnt respond. You responded in a letter but you didnt respond and explain the lack of data in that schedule. From that i can assume two or three things here. Number one, the letter was to myself, mr. Huizenga, and mr. Barr. You are not worthy of a response. Or else you are correct in that you are not meeting with industry people as they tell us, or both. Which i think thats probably the case. Very disappointing. Mr. Chopra there are many Industry Associations mr. Luetkemeyer we have been down this before. The problem is you dont meet personally. Mr. Chopra i meet personally. Mr. Luetkemeyer your schedule doesnt back that up. I want to move on to another subject here. One is regulation by legislation by regulation. Director, you have chosen to wreck late by press release guidance instead of rule making. As you know the a. P. A. Allows for Public Comment on proposed rules which gives regulated agencies the opportunity to provide feedback and ensure their concerns are incorporated. Since public statements are not rule makings or official actions and the guidance you issue is not legally binding, are Financial Institutions and firms within their rights if they dont not ahere to them . Mr. Chopra i could not hear. Mr. Luetkemeyer since pub limb statements are not rule phaeugss or official actions, are Financial Institutions and firms within their rights if they do not adhere to your advice. Mr. Chopra they dont create new obligations. One of the pieces of feedback this committee has given is concerns about using enforcement only. I have continued a practice from my predecessor, to issue more informal guidance mr. Luetkemeyer so you mr. Chopra to help give transparency to the approach the agency is taking. Mr. Luetkemeyer that doesnt answer my question. My question is are the firms within their rights to not adhere to your proclamations or guidance . Mr. Chopra they have to follow statute and regulation. Mr. Luetkemeyer they are within their rights to not adhere to your proclamations and guidance. Mr. Chopra yes. They only have to look to statute and regulation. These other forms we got input from the Consumer Bankers Association a few years ago they wanted to see more mr. Luetkemeyer its clarification you are using these guidance and official actions. Mr. Chopra what we are trying to do, the market is so dynamic and changes. We have entities saying do i need to hire a lawyer mr. Luetkemeyer i know what youre trying to do. But its not enforceable. Mr. Chopra its trying to reinstate existing law. Mr. Luetkemeyer guidance is not enforceable. Mr. Chopra it does not mr. Luetkemeyer that is not enforceable, correct . Mr. Chopra that does not provide any obligation mr. Luetkemeyer its not enforceable. You agree. Mr. Chopra yes. Mr. Luetkemeyer i think there are 12 compliance bulletins and opinions. Great. Gives clarification. This is not enforceable. This is concerning to me because you turn around and you threaten different entities all the time. You become the greatest extortionist in the history of this country by what youre doing with the actions. Issue press releases and make up new words. I have checked with attorneys, looked at the people who design and work to legal financial legal dictionaries, this is unenforceable term, you made it up yourself. More authority to have more impact on things. Extort more money from people. Mr. Chopra i completely and respectfully disagree. Every action we have taken is based on laws that this body has acted. Mr. Luetkemeyer director, junk fees is not a legal term, enforceable term. Period. Just like guidance is not enforceable. Yet you try to impose that on people. Extrapolate from the u tkap party using the determine junk fees to be able to have new authority. You cant create authorities out of thin air. Only congress can give you that authority. I yield back. The gentleman from new york, mr. Meeks, is recognized. Mr. Meeks thank you, mr. Chairman. Ranking member waters. Thank you directl chopra, for being here and listening to some of this debate. I cant help but say thank god we created the cfbp who is singular focus. I hear the interest of other groups who have been there advocate on their behalf. Most of the industry, did anyone else have someone to advocate on their behalf . What i dont understand is why it is so bad to have an agency of which you represent to advocate on behalf of the American Consumer. Throughout history we have seen the consumer be ripped off, taken advantage of. Thats why we have to have labor unions. Because we know we have seen that folks on their own dont see a move and benefit of everyday people. So there has to be someone to advocate on their behalf. To look at it, make sure the flying field is level. The level of playing field. So that the consumer has a voice and someone there to say dont rip us off. This is a bad product. I lived it. In the financial crises of 2008. Thats why you are here. We can never allow that to happen again. And one of the proudest moments of my career here is working with Ranking Member waters and others to create the Consumer FinancialProtection Bureau. I thank you for doing your job. Your job is to advocate on behalf of consumers. No one else. Thats your job. Thanks to all these folks. Helping the american people. Helping the american people. And you helped all, not just democrats, you are helping the American Consumer who is a democrat, republican, independent. No matter where they are. Rural or urban. Thank you for doing that. Now, the recent Bank Failures dominated the media and the Media Attention and this committee, particularly, this spring. We had an opportunity to speak with the prudential regulators responsible for oversight of the institutions and continue to look at what could have been done to prevent the failures. But yet, weve not had the opportunity to speak with you in the aftermath, the voice and the advocate for the consumer. So from your perspective, how do the recent Bank Failures highlight the need for a strong cfpb now more than ever . Mr. Chopra well, as you referenced, in your own community and almost everyones, the financial crisis was absolutely devastating. And the victims of financial crises, the first ones are often those who can least afford the shock, and so we had to take extraordinary steps to mitigate some of that damage but also people are now learning about deposits and safety and insurance and there are places where people may be holding their money that arent insured and were going to obviously want to make sure that any instability in the financial world in Financial Markets does not impact the consumer, as you say. The failure of credit swooes was a big concern at the cfpb to say how will it affect our Mortgage Markets and auto markets so it absolutely goes hand in hand. Mr. Meeks so one of the issues i am also focused on and we heard that the cfpb teamed up with the federal redefsh, fdic reserve, fdic, to propose a rule designed to make the automated home valuation process fair. So i believe that its taken the right direction, but im curious, when we talk about a. I. , would this rule promote auto appraisals over human appraisers . Mr. Chopra no. A. I. When used to automatically commute homes does not bake in any sort of discrimination and i think everyone deserves a fair and Accurate Appraisal and thats what the proposal, which implements federal law, seeks to provide. Mr. Meeks thank you. The gentlemans time has expired. The gentleman from michigan, mr. Huizenga, is now recognized. Mr. Huizenga thank you, mr. Chairman. And director chopra, welcome back. I have a number of things to hit here but i was curious when my colleague, french hill, was asking you about the breach. It struck me it seemed like you were downplaying it. You said Insider Threat that you mentioned but that person, quote, sent some emails. Later, to another question, you indicated it was a, quote, set of emails. Would you classify the incident that happened as a minor incident, a sort of mediumsize or mr. Chopra its an extremely serious and Major Incident, theres no question about that. Mr. Huizenga ok. Great. Glad to hear you backing that up. I was bash mr. Chopra and i apologize. I dont want to underplay in any way. We have done and looked hard to make sure were following all the steps. We have begun notification. Sorry. Mr. Huizenga yep. I understand that. I was back conferring with our attorneys as to exactly how much we could talk about publicly because we dont want to get in the way of an investigation. I know you dont. I dont. But i do have some concerns. You were notified in march. Let the committee know in may about what you now call a Major Incident. We asked for a briefing on that. A briefing was granted at the staff level. But however, when our attorneys asked your briefers, i dont know who they were. Maybe they were attorneys. Maybe they werent. But when they were asked basic questions like, quote, did anyone at cfpb speak to the individual . Staff were your agency could not answer the question. And referred Committee Staff to speak to the inspector general. Your staff explained the only reason why cfpb knew about the breach from a different employee. You talked about that. Committee staff asked about the identity of the other employee and about the circumstances surrounded the employee raising concerns. Your staff could not or would not give a single answer to any of these basic questions. Cfpb staff emphasized there is no reason to suspect the information was dissimilar mated, which i disseminated which i am glad to hear. What we were briefed on, which i dont think was Public Information as of yet, this was a Major Incident with significant consequences potentially. However, when they were pressed, they confirmed that the only evidence to sustain the claim was that so far there had been no suspicious activity. For a little perspective i wont go into all of that. We all have seen what has happened with equifax and others that had that you have been part of punishing others that have had serious data breaches. And glad to hear you say it is serious and im glad to hear that you are cooperating with Law Enforcement but we also expect you fully cooperate with this committee and congress writ large and our subcommittees that are called oversight and investigation for a reason. And these basic these are basic questions that we are asking and we expect full and complete answers and your staff couldnt give basic answers. Hell, sometimes there wasnt any answer. No answer at all. And it makes me wonder im sorry to be suspicious here. I know how d. C. Works. It makes me wonder, once again, youre sort of dismissive attitude congress that has come across in previous hearings and previous interactions that, did you send someone that intentionally didnt know what was going on so they wouldnt pass that information on to us . Were they were they were they somehow opaque in their answers for some reason . So im not expecting you to answer that because im not looking for specifically a response but i am making sure once again you are put on notice that we will be following up and we expect our answers to be our questions to be answered. One last thing im going to pivot to. The bureaus website provides a Fund Transfer request letter that you made to the fed before every quarter of the Financial Year and the feds response. Did the fed deny your agencys request . Mr. Chopra not that i know. Mr. Huizenga has the fed ever told you that a request was too high or too low . Mr. Chopra i believe the feds feedback is usually about when we should request it because they manage for liquidity purposes. Mr. Huizenga ok. Last time the shared fed and the did a funding process in july, 2020, it was done at the request of chairman mchenry and it was almost three years ago. Are you aware of any audit requested by the cfpb mr. Chopra yes. Mr. Huizenga sorry. My time is up. I have a letter to be submitted, mr. Chairman. That was a letter that i sent along with for a signature. And we wanted to make sure that was regarding without objection. Mr. Huizenga i yield back. The gentleman from georgia, mr. Scott, is recognized. Senator scott thank you, director chopra. There are a lot of problems with this cryptoasset fraud business. In november of last year, you all published a complaint bulletin filled with these complaints, fraud, theft, scams, all of them were significant problems. And your analysis is that the bad actors are leveraging Crypto Assets to specifically perpetuate fraud on American Consumers. Excuse me. From 2018 to 2022, you all received 8,300 complaints. Director chopra, has the cfpb determined whether certain vulnerable groups are at particular risk for these scams . Mr. Chopra yes. So i believe we specifically mentioned that older adults. It used to be more common, for example, for a scammer to ask someone, go buy me some gift cards or but were now seeing it shift to a more digital and often using Crypto Assets. Weve also identified a place where it has some interaction with Identity Theft where its not always cryptospecific, but Service Members can be targeted for i. D. Theft in ways that can really expose them to certain harms. Mr. Scott let me ask you this, because we got to find some answers to this. The problems are overwhelming. You all have some great people over there at the cfpb, and we establish this for a purpose. We got to find some answers here. Let me ask you. Will financial literacy, Financial Education help . This is being put on people that are having difficulty. Mr. Chopra yes. I think its actually really important that Financial Education and literacy, we shift it so its really adapted to the digital world. Theres lots of different ways in which Digital Technologies and with genre tiff a. I. , we could have voice cloning in ways it can sound like a Family Member is calling you. We could have different ways in which digital images can look like reality. And we want to make sure we can arm people how they can spot some of this. Mr. Scott well, thats very good. What you said in mind, director chopra, can i get can this committee get because were concerned about this. Can this committee get a clear commitment from you food that the cfpb will use a portion of the more than 600 million in unallocated civil penalty funds to support financial literacy, Financial Education for our consumers in the program this can get to . We have to arm our people with the weapons. Theyre the ones that are being ta