Two recent moves by the Consumer Financial Protection Bureau that the agency is touting as furthering the cause of consumer protection have drawn the ire of consumer advocacy groups.
For one, the CFPB has set up a task force to look into existing consumer protection laws and regulations, and how to improve them. The consumer protection agency that was set up under the Dodd-Frank regulation following the financial crisis has also come up with a new framework for how it will apply the standard for “abusiveness” by industry players in its supervisory and enforcement duties.
About its new standard for abusive practices, CFPB Director Kathleen Kraninger noted, in a media release, “We’ve developed a policy that provides a solid framework to prevent consumer harm while promoting the clarity needed to foster consumer beneficial products as well as compliance in the marketplace, now and in the future.”
How CFPB will enforce abusive practices standard
Although the Dodd-Frank Act prohibited abusive practices by companies that provide financial products or services to consumers, it does not clearly define what an abusive practice might be. According to the CFPB, this lack of definition could actually impede firms from providing certain services or products that could benefit the public.
The CFPB has therefore come up with the below framework for how it will enforce the abusiveness standard:
- The agency will only pursue cases for supervision and enforcement in which the harm from the abusive conduct is greater than the benefit to consumers.
- It will avoid “dual pleading” of cases as being both abusive and unfair or deceptive when the same facts, or most of the facts, support both the allegations. Instead, the CFPB will focus its attention on “stand-alone” abusiveness violations with a clear connection between the facts cited and the CFPB’s legal analysis.
- CFPB will not pursue monetary compensation for abusiveness cases, except when “there has been a lack of good-faith effort to comply with the law.” However, the agency will continue to seek “restitution” for injured consumers whether or not a business acted in good faith...Read more>>