• The move comes as part of a legal fight with Forcht Bank and banking trade groups challenging the rule's legality.

• An accelerated rulemaking process is planned, with a new draft to be issued within weeks.

In a major reversal, the Consumer Financial Protection Bureau (CFPB) announced today it will undertake a full rewrite of its controversial "open banking rule" rather than scrap it entirely, as many had anticipated. The rule, finalized last year under the Biden Administration, sought to empower consumers by granting them access to their personal financial data and enabling easier data sharing with third-party fintech apps and services.

In light of recent events in the marketplace, the CFPB wrote in a court filing, the Bureau has now decided to initiate a new rulemaking to reconsider the Rule with a view to substantially revising it and providing a robust justification.

Consumer advocates say the tactic is a ruse. "Trump and (OMB Director Russell) Vought betray their MAGA base when they close banking again," said Bart Naylor, financial policy advocate at Public Citizen in an email to ConsumerAffairs. "The rule aimed to open banking to market competition. Reopening the rule is legal jujitsu in the court case."

The announcement was made in a request to stay a lawsuit filed by Forcht Bank, the Bank Policy Institute, and the Kentucky Bankers Association in the U.S. District Court for the Eastern District of Kentucky. The lawsuit, filed the same day the final rule was issued on October 22, 2024, alleged that the CFPB had overstepped its statutory authority. U.S. District Judge Danny C. Reeves granted the stay, noting that the parties and judicial economy are better served by allowing the CFPB time to revise the rule.

"Accelerated" process

The CFPB said it would begin an accelerated rulemaking process, starting with an advanced notice of proposed rulemaking to be issued within three weeks of the July 29 stay request. Officials say they aim to produce a substantially revised final rule that reflects the policy preferences of new leadership and corrects alleged flaws in the original rule.

At the center of the dispute is Section 1033 of the Dodd-Frank Act, which mandates that consumers have access to information about their financial products and transactions. The Biden Administration had interpreted this to mean that consumers should have the right to retrieve and share their financial data, and tasked the CFPB with establishing standards for doing so securely and consistently.

However, opponents, including many in the banking industry, argued the final rule went too far, imposing burdensome requirements on the banks and financial services companies and also exposing sensitive financial data to potential misuse.

The Trump Administration had previously withdrawn the rule during its regulatory rollback campaign, declaring it arbitrary and capricious. Now, with new CFPB leadership in place, the agency appears set on charting a middle path: retaining the core consumer data rights mandate of Section 1033, but rewriting the rule to survive legal scrutiny and align with the current administrations priorities, which will likely be less pro-consumer.

• Italian regulators say Sheins green messaging was vague, misleading, or overstated

• Authorities criticized Sheins claims about recycling and product sustainability

• This marks the second major European fine for the fast-fashion giant in just two months

Shein, the Chinese fast-fashion giant known for its ultra-cheap, fast-turnaround clothing, has been fined $115 million by Italian authorities for misleading environmental claims the latest in a growing wave of scrutiny from European regulators.

The Autorit Garante della Concorrenza e del Mercato (AGCM), Italys competition authority, concluded that Shein employed misleading or omissive environmental messaging across its website and promotional materials. Specific sections flagged include #SHEINTHEKNOW, evoluSHEIN, and Social Responsibility, which AGCM said contained sustainability claims that were vague, generic, and/or overly emphatic, or in some cases, flat-out false or at least confusing.

The regulator said Sheins marketing around its evoluSHEIN by Design line led consumers to believe the products were fully recyclable and made solely from sustainable materials claims that do not reflect reality, according to AGCM. Recycling such garments is not currently feasible due to the materials used and limitations of existing recycling systems.

Branding strategy

AGCM also criticized Shein's broader environmental branding strategy, warning that it could mislead consumers into overestimating the companys sustainability efforts. Despite Sheins published roadmap which highlights pillars like Equitable Empowerment, Collective Resilience, and Waste-Less Innovation the authority found these narratives lacked transparency and substance.

The fine was issued to Infinite Styles Services Co Ltd, Sheins Dublin-based European operator. In response, Shein said it had fully cooperated with the Italian authorities and moved swiftly to address their concerns. We have strengthened our internal review processes and improved our website to ensure that all environmental claims are clear, specific, and compliant with regulation, a spokesperson said.

This is Sheins second major regulatory blow in Europe in just over a month. In June, Frances consumer watchdog levied a 40 million penalty on the company for deceptive commercial practices, signaling increasing regulatory intolerance for greenwashing in the fashion industry.

As Shein eyes a possible IPO and further global expansion, its critics and regulators are ramping up pressure to align its practices with its glossy environmental promises.