The Dodd-Frank Act prohibits “unfair, deceptive, or abusive” acts and practices by the financial companies regulated under the Act, and gives the Consumer Financial Protection Bureau authority to enforce the prohibition. The Act defines "abusive" as an act or practice that:
(1) Materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or
(2) Takes unreasonable advantage of –
(A) a consumer’s lack of understanding of the material risks, costs, or conditions of the product or service;
(B) a consumer’s inability to protect his or her interests in selecting or using a consumer financial product or service; or
(C) a consumer’s reasonable reliance on a covered person to act in his or her interests.
The Wall Street Journal reports that, CFPB acting director Mick Mulvaney, speaking at a recent conference of mortgage bankers, said that actions that constitute “unfair” and “deceptive” are well established, but that the meaning of “abusive” is not as clear. Therefore, he said, the CFPB is working on a regulation to define “abusive.”
The article continues: “Addressing the bureau’s enforcement approach is the latest step by Mr. Mulvaney to introduce a more industry-friendly approach to policing financial companies.”
The full article is here. (Subscription may be required.)
The CFPB's 2013 bulletin explaining the prohibition against unfair, deceptive, or abusive acts in the context of debt collection is here.
