By Ray Birch
WASHINGTON— With the Consumer Financial Protection Bureau significantly scaled back under the Trump Administration, states are stepping in to fill the void with their own consumer protection, privacy, and financial services laws. But for credit unions, the result is not greater clarity—it’s a patchwork of conflicting requirements that could drive up compliance costs, slow innovation, and ultimately hurt members.
That’s the warning from America’s Credit Unions, which recently wrote to the Department of Justice expressing concern about the proliferation of state-level rules. In an interview, ACU’s Ann Petros, VP, policy engagement and credit union operations, and James Akin, head of regulatory advocacy, outlined what this trend means for credit unions, what institutions need to know now, and how they should prepare.
Petros explained that state regulators are filling what they see as a void in enforcement. With the CFPB retreating, attorneys general in states like New York have filed lawsuits in areas such as payments fraud and consumer protections. Other states are passing new laws on data privacy, biometrics, and even artificial intelligence.
“The reality is that credit unions now have to navigate not just federal laws, but a growing number of state-level rules that may overlap or even conflict with each other,” Petros said. “That can create a compliance maze, especially for those operating across multiple jurisdictions.”
Akin added that the burden falls hardest on smaller and mid-sized institutions.
“The largest financial players can hire entire compliance teams dedicated to tracking state-by-state rules. For community-based credit unions, the cost of complying in multiple states can be a deterrent to adopting new technologies that would otherwise benefit members,” he noted.
What Credit Unions Need to Know
Ann Petros
According to Petros, most of the core consumer protection laws aren’t changing. What’s shifting is who is enforcing them—and how aggressively. That means credit unions should not view this as a reason to relax, but rather to sharpen compliance practices.
“Business as usual still applies,” she said. “Credit unions need to stay vigilant about consumer protection requirements in their home states, and if they operate across borders, they must track enforcement activity in each jurisdiction. Knowing where state attorneys general or regulators are stepping up enforcement will help credit unions anticipate potential risks.”
Emerging laws around data privacy and biometrics are especially important. As more states adopt unique rules, compliance risks rise.
‘“You may be forced to adopt the strictest state standard just to ensure you don’t run afoul of conflicting requirements,” Akin warned. “That could mean scaling back innovation or abandoning certain tools altogether.”
What Credit Unions Should Do
Both experts urged credit unions to invest in strong compliance staffing and processes, even if resources are limited.
“It’s critical to have people who not only know federal law but who are attuned to state developments and how they might ripple across your operations,” Petros said.
James Akin
She also advised keeping a close eye on enforcement trends.
“What your state is doing today gives you a roadmap for where it’s likely heading,” she said. “Pay attention to new bills—even if they don’t pass right away—because they signal regulatory priorities.”
Akin emphasized that America’s Credit Unions is advocating for federal preemption to restore a uniform framework. But until that happens, credit unions must be ready for a fragmented reality and should stay engaged with ACU and use the resources it’s built on state laws, and most importantly, weigh the costs of innovation carefully.
Jason Stverak
Credit unions are not powerless, but they are under growing pressure. As state legislatures continue to step into the regulatory vacuum, the cost of compliance will only increase—leaving smaller institutions at risk of being squeezed, Petros concluded.
DCUC's Perspective
“With Congress slow to act and federal regulators pulling back, we’re seeing states step into the void – but the result is an unsustainable patchwork of rules," said DCUC Chief Adfvocacy Officer jason Stverak. "Credit unions, especially those serving military communities, are now grappling with different standards and even selective enforcement from state to state, which creates confusion and added costs for our members. We need clear, uniform national standards that provide consistency and fairness. Until that happens, credit unions must advocate in state capitals to ensure new laws truly protect consumers without piling on undue burdens. Every dollar we spend navigating 50 different laws is a dollar not going into member services – so a single, robust framework would help us focus on what really matters: serving our members."