CFPB Rescinds UDAAP Policy Statement


The statement, enacted in 2020, was to provide clarity for regulated entities; the bureau says now the statement is “inconsistent” with its mission.

3/12/2021 9:00

The Consumer Financial Protection Bureau, under leadership of Acting Director David Uejio, is rescinding its “Statement of Policy Regarding Prohibition on Abusive Acts or Practices,” issued in January 2020.

“Going forward, the CFPB intends to exercise its supervisory and enforcement authority consistent with the full scope of its statutory authority under the Dodd-Frank Act as established by Congress,” according to a news release from the CFPB. “The CFPB has made these changes to better protect consumers and the marketplace from abusive acts or practices and to enforce the law as Congress wrote it.”

The policy statement was issued under former CFPB Director Kathy Kraninger’s leadership and reflected ACA International’s advocacy seeking clarity for the use of Unfair, Deceptive, or Abusive Acts or Practices (UDAAP), ACA International previously reported.

The bureau’s announcement it is rescinding the policy states that it “was inconsistent with the bureau’s duty to enforce Congress’s standard and rescinding it will better serve the CFPB’s objective to protect consumers from abusive practices.”

“Going forward, the CFPB intends to consider good faith, company size, and all other factors it typically considers as it uses its prosecutorial discretion,” the bureau states. “But a policy of declining to enforce the full scope of Congress’s definition of an abusive practice harms both the consumers who were taken advantage of and the honest companies that have to compete against those that violate the law.”

ACA is reviewing the bureau’s statement, which states it does not “actually deliver clarity to regulated entities.”

The CFPB continues:

“In fact, the policy statement’s intended principles, including ‘making a good-faith effort to comply with the abusiveness standard,’ themselves afford the bureau considerable discretion in its application and add uncertainty to market participants. Additionally, the bureau’s further consideration of and experience under the policy statement have led it to conclude that the intended principles have the effect of hampering certainty over time.”

ACA encourages members to read the bureau’s policy statement update and to look for additional information from ACA about how this should be considered.

The rescinded policy statement will be official upon publication in the Federal Register.