MONTH-IN-BRIEF (Jan 2020)
Consumer Finance
Bureau Announces Policy Regarding Abusive Acts or Practices
By Eric Mogilnicki and Lucy Bartholomew, Covington & Burling LLP
On January 24, 2020, the CFPB released a policy statement providing what it terms a “common-sense framework” on how it intends to apply the abusiveness standard in supervision and enforcement matters. The Dodd-Frank Act broadly prohibits abusive acts or practices in connection with the provision of consumer financial products or services. The policy statement follows a 2019 Bureau Symposium on Abusive Acts or Practices.
The CFPB’s policy statement identifies several principles it intends to follow in its enforcement and supervision activities including:
- 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 both abusiveness and unfairness or deception on the basis of the same facts;
- alleging abusive conduct in a way that will demonstrate the nexus between cited facts and the Bureau’s legal analysis; and
- seeking Civil Monetary Penalties for abusiveness only when there has been a lack of a good-faith effort to comply with the law.
