WASHINGTON, D.C. – The Consumer Financial Protection Bureau (Bureau) today issued a policy statement providing a common-sense framework on how it intends to apply the "abusiveness" standard in supervision and enforcement matters.
The Dodd-Frank Act is the first Federal law to broadly prohibit "abusive" acts or practices in connection with the provision of consumer financial products or services. However, nearly a decade after the Act became law, uncertainty remains as to the scope and meaning of abusiveness. This uncertainty creates challenges for covered persons in complying with the law and may impede or deter the provision of otherwise lawful financial products or services that could be beneficial to consumers.
Through this policy statement, the Bureau is providing clarification on how it intends to apply abusiveness in order to promote compliance and certainty. Commencing immediately the Bureau intends to apply the following principles during supervision and enforcement work by:
- 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
"I am committed to ensuring we have clear rules of the road and fostering a culture of compliance – a key element in preventing consumer harm," said CFPB Director Kathleen Kraninger. "We've developed a policy that provides a solid framework to prevent consumer harm while promoting the clarity needed to foster consumer beneficial products as well as compliance in the marketplace, now and in the future."
In the policy statement, the Bureau leaves open the possibility of engaging in a future rulemaking to further define the abusiveness standard.
Last year, the Bureau held a Symposium on Abusive Acts or Practices with academics and practitioners. These experts provided a variety of perspectives on the need and benefits in developing a clearer understanding of the abusiveness standard; most agreed that the Bureau should seek to resolve the uncertainty. The symposium, along with other feedback from stakeholders, was an important part of the process leading to the Bureau’s decision to issue the policy statement. The symposium archive webcast can be found here: https://www.consumerfinance.gov/about-us/events/archive-past-events/cfpb-symposium-abusive-acts-or-practices/.
The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by regularly identifying and addressing outdated, unnecessary, or unduly burdensome regulations, by making rules more effective, by consistently enforcing federal consumer financial law, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.