On August 8, 2024, the CFPB filed its Appellant Brief with the Fifth Circuit, appealing the September 2023 decision by the Federal District Court for the Eastern District of Texas that vacated the March 2022 changes to the CFPB’s unfair, deceptive or abusive acts or practices (UDAAP) Exam Manual. In the 2022 amendments to the Exam Manual, the CFPB purported to use the unfair prong of UDAAP under the Consumer Financial Protection Act (CFPA) to prohibit discriminatory conduct, whether or not it is covered by fair lending laws.… Continue Reading
UDAAP
CFPB issues UDAAP guidance on contracts for consumer financial products and services
On June 4, 2024, the Consumer Financial Protection Bureau (“CFPB”) issued a Consumer Financial Protection Circular 2024-03 (“Circular”) warning that the use of unlawful or unenforceable terms and conditions in contracts for consumer financial products or services may violate the prohibition on deceptive acts or practices in the Consumer Financial Protection Act (“CFPA”).… Continue Reading
CFPB Takes Action Against BloomTech, Inc. for ISAs that Violate TILA, UDAAP, and the FTC’s Holder Rule
On April 17th, the CFPB issued a consent order to a for-profit training school alleging numerous violations of law related to its use if income share agreements (“ISAs”). According to the Bureau, BloomTech, Inc. (“BloomTech”) and the company’s founder and CEO engaged in deceptive and abusive acts or practices, violated the Truth in Lending Act (“TILA”) and Regulation Z, and violated the Federal Trade Commission’s (“FTC”) Holder Rule.… Continue Reading
This week’s podcast episode: The Consumer Financial Protection Bureau’s use of unfairness to regulate discriminatory conduct: a discussion of the consumer and industry perspectives
By Barbara S. Mishkin on
Our special guest is Jeff Sovern, Professor at the University of Maryland Francis King Carey School of Law. In March 2022, the CFPB announced that it had revised its exam manual to instruct its examiners to apply the “unfairness” standard under the Consumer Financial Protection Act to conduct considered to be discriminatory, whether or not it is covered by federal laws that expressly prohibit discrimination. … Continue Reading
CFPB encourages New York to ban unfair or abusive conduct
By Kristen E. Larson on
On March 19, 2024, the Consumer Financial Protection Bureau (“CFPB”) published a blog touting letters it has sent to New York Governor Kathy Hochul, New York State Senate leaders, and New York State Assembly leaders to highlight the importance of a ban on abusive or unfair conduct that is being considered in pending New York legislation.… Continue Reading
CFPB Press Release and Circular cite “abusive” steering practices in connection with comparison-shopping tools and lead generators
On February 29, 2024, the Consumer Financial Protection Bureau (“CFPB”) issued Consumer Financial Protection Circular 2024-01, Preferencing and steering practices by digital intermediaries for consumer financial products or services. The Circular advised that: “[o]perators of digital comparison-shopping tools can violate the [Consumer Financial Protection Act (CFPA)] prohibition on abusive acts or practices if they distort the shopping experience by steering consumers to certain products or services based on remuneration to the operator;” and “lead generators can violate the prohibition on abusive practices if they steer consumers to one participating financial services provider instead of another based on compensation received.”… Continue Reading
CFPB proposes rule to ban “rarely charged” NSF fees for declined transactions based on wildly expansive view of “abusive” prong
On January 24, 2024, a week after issuing its proposed rulemaking for overdraft services, the Consumer Financial Protection Bureau (“CFPB”) issued its proposed rulemaking on non-sufficient funds (NSF) fees.
NSF Fee Proposal
Banks typically charge NSF fees when an item is submitted for payment against a consumer’s account and returned unpaid due to insufficient funds.… Continue Reading
CFPB publishes language access plan for consumers with limited English proficiency
By Loran Kilson on
Throughout the past few years, the CFPB has sought input from a range of stakeholders, including community-based organizations and financial institutions, for feedback about how it can improve consumer financial products and services for consumers with limited English proficiency (LEP). As a part of these efforts, the CFPB has taken the following actions: in 2020, it published a Request for Information regarding challenges faced by LEP consumers and hosted a roundtable to discuss these challenges with stakeholders; in 2021, it published a statement providing compliance principles and guidelines on assisting LEP consumers. … Continue Reading
Fifth Circuit stays further proceedings in CFPB appeal of summary judgment in lawsuit challenging UDAAP exam manual changes pending SCOTUS decision in CFSA v. CFPB
Earlier this month, the CFPB filed a notice with the Texas federal district court that it is appealing to the Fifth Circuit the district court’s order granting summary judgment to a group of trade associations in their lawsuit against the CFPB challenging the changes made to its UDAAP Exam Manual in March 2022. … Continue Reading
CFPB removes changes regarding discrimination as an unfair practice from UDAAP exam manual but appeals from district court order vacating changes
In September 2023, the CFPB updated its UDAAP Examination Manual to remove the changes it made in March 2022 which provided that unfair acts or practices encompassed discriminatory conduct, even in circumstances to which federal fair lending laws, such as the Equal Credit Opportunity Act, did not apply.
It has been suggested that this update means the CFPB has retreated from its position that discriminatory conduct can be the basis of a UDAAP violation. … Continue Reading