On January 24, 2020, the CFPB issued a policy statement to provide clarification on how it intends to enforce abusiveness with respect to Dodd-Frank’s prohibition on abusive acts or practices in connection with the provision of consumer financial products or services.
The CFPB issued the policy statement, in large part, in response to feedback it received at the Symposium on Abusive Acts or Practices, which the CFPB held last year. Academics and practitioners at the Symposium agreed that the CFPB should seek to resolve uncertainties surrounding the abusiveness standard.
The policy statement outlines several principles the CFPB intends to apply when it challenges conduct as abusive, including:
- challenging conduct only when harm to consumers outweighs the benefit;
- isolating “abusive” act allegations from “unfair” or “deceptive” act allegations; and
- seeking monetary relief only when there has been a lack of good-faith effort to comply, except that the CFPB will seek restitution where conduct has injured consumers.
Of note, however, the policy statement does not provide guidance concerning what sort of conduct the CFPB considers abusive, nor does it set forth a standard for defining abusive conduct. The CFPB left open the possibility of further rulemaking to define the abusiveness standard.