CFPB’s UDAAP symposium focuses on defining ‘abusive’

June 28, 2019

CUNA attended Wednesday’s symposium hosted by the Consumer Financial Protection Bureau (CFPB) which focused on defining “abusive” under Unfair, Deceptive and Abusive Acts or Practices (UDAAP). CFPB Director Kathy Kraninger and Deputy Director Brian Johnson made remarks, and there were two panels of legal and academic UDAAP experts.

Tuesday’s conversation generally focused on the statuary history of “abusive,” the role of cost-benefit analysis and whether behavioral economics can play a role in determining abusive behavior.

The first panel featured academics discussing policy issues related to the abusive standard under the Dodd-Frank Act, the second panel featured legal experts examining how the abusive standard has been used in practice.

Additional details can be found on CUNA’s Removing Barriers Blog.

CUNA has called on the CFPB to provide clarity regarding UDAAP, and in a letter to Kraninger when she was confirmed in December that it would support a rulemaking that including the following actions:

  • Solicit feedback on whether to eliminate or clarify the overly-subjective “abusive” prong of UDAAP and whether other aspects of its UDAAP authority should be changed;
  • Clarify that previous enforcement actions or consent orders that conflict with statutory or judicial precedent create no new expectations for compliance; and
  • Clarify and reaffirm the bureau’s narrow authority under the Dodd-Frank Act in regulating the business of insurance—particularly as it applies to credit unions and banks selling insurance—and that UDAAP is not a backdoor to regulate insurance activities.

The event was a first in a proposed symposia series from the CFPB to be conducted over the next few months. Additional dates and details will be released by the CFPB in the coming weeks, but topics covered during the series will include:

  • 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.