This first discussion was on how to clarify the meaning of ‘abusiveness,’ which the CFPB has the power to prohibit as an ‘unfair, deceptive or abusive act or practice’ (sometimes referred to as UDAAP) under the Dodd-Frank Act if it meets certain threshold requirements.
CFPB officials characterized the topic as central to the Bureau’s mission to protect consumers. The Federal Trade Commission has a long history of protecting consumers from ‘unfair and deceptive’ acts and practices under the FTC Act, along with case law interpreting the margins of its authority. On the other hand, the ‘abusive’ standard in the Dodd-Frank Act takes up just a few lines and has not been otherwise defined or heavily enforced by the CFPB.
Symposium panelists were divided on whether further definition would be useful. One viewpoint is that the definition of ‘abusive’ in the Dodd-Frank Act is already sufficiently clear, and that further bright-line guidance would limit availability of financial products in the marketplace. The opposite viewpoint is that a more detailed definition, paired with consistent enforcement by the CFPB, would bring more certainty for all parties (the financial services industry, the CFPB and consumers).
The form of potential future CFPB guidance was also at issue. Panelists noted that ‘guidance through enforcement’ was a blunt tool that could yield inconsistent findings that are driven mostly by the facts of the individual case, and that recent actions seemed to conflate ‘abusiveness’ with the better-defined formulation of ‘unfair and deceptive’ acts and practices. The CFPB has direct authority in the Dodd-Frank Act to prescribe rules to better identify prohibited ‘abusive’ acts and practices, but one panelist noted that the preliminary step of more informal guidance, perhaps in the form of a policy statement, could serve as a ‘rough draft’ of future regulations.
The CFPB also announced additional symposia beginning later this year on behavioral law and economics, small business loan data collection, disparate impact and the Equal Credit Opportunity Act, cost-benefit analysis, and consumer-authorized financial data sharing.