On Jan. 24, 2020, the Consumer Financial Protection Bureau (CFPB) issued a new policy on unfair, deceptive, or abusive acts or practices (UDAAP). Specifically, the 17-page Statement of Policy Regarding Prohibition on Abusive Acts or Practices focuses on application of the “abusive” standard under UDAAP. There is a tremendous amount of confusion in the industry as to what constitutes abusiveness and the CFPB recognizes this. The CFPB has brought up 32 enforcement actions based on claims of abusiveness. The CFPB intends the policy statement to provide some measure of clarity going forward in terms of both UDAAP supervision and enforcement. There are three principles the CFPB stated they will follow going forward:
Focusing on citing or challenging conduct as abusive in supervision and enforcement matters only when the harm to consumers outweighs the benefit.
Generally avoiding “dual pleading” of abusiveness and unfairness or deception violations arising from all or nearly all the same facts, and alleging “stand alone” abusiveness violations that demonstrate clearly the nexus between cited facts and the bureau’s legal analysis.
Seeking monetary relief for abusiveness only when there has been a lack of a good-faith effort to comply with the law, except the bureau will continue to seek restitution for injured consumers regardless of whether a company acted in good faith or bad faith.