The Consumer Financial Protection Bureau hosted a symposium with private attorneys to discuss the term “abusive” in “unfair, deceptive, and abusive acts and practices” (“UDAAP”) in late June. This was the first symposium, part of a symposia series, that will help the CFPB explore consumer protections in the changing financial services marketplace. There were two panels with four panelists on each panel. The first panel discussed the “abusive” policy background, and the second panel discussed the practical application of the “abusive” standard.
During the first discussion, panelists disagreed on “whether consumer harm is required for a practice to be abusive.” Some panelists thought that “unfair and deceptive” focuses on the impacts to the consumer, whereas “abusive” focuses on the company’s actions and not its impact on the consumer. Another set of panelists found it odd to separate the impact to the consumer and the company’s actions, specifically with respect to focusing on company conduct when there is no actual consumer harm – the two should not be looked at in isolation. In addition, the first panel discussed “whether abusive requires knowledge on behalf of the company.” While there is no “knowledge” requirement in the statute to determine whether a practice is abusive, a company’s knowledge may be taken into account to determine whether the practice was abusive.
During the second discussion, panelists disagreed on whether additional clarity needed to be given to the term “abusive.” Whether additional clarity is needed hinged on what can be taken from the statutory language and secondary sources. Some panelists believe there is enough information contained in the statute, secondary sources, and interpretations to clarify the term, while others believe that “abusive” is a catchall term that makes it difficult for companies to understand exactly what it entails. Further, it can be difficult to determine how the “abusive” standard works in practice because many of the enforcement actions typically focus on the “unfair and deceptive” aspects and not the “abusive” aspect of UDAAP. For the enforcement actions where “abusive” is included, the term is usually piggybacked on “unfairness and deception,” making it hard to distinguish between the terms.
Since the meaning of abusiveness is “less developed than the meaning of unfairness or deception,” the purpose of this symposium was to provide a public forum for the CFPB and the public to hear various perspectives regarding the definition of “abusive.” While only the first in a series, the symposium was intended to help create a transparent dialogue to help the CFPB potentially develop additional policy processes, including future rulemakings.