A bill has been introduced in the House of Representatives that seeks to “clarify” the standards for what defines Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) under the Consumer Financial Protection Act with respect to enforcement actions brought by the Consumer Financial Protection Bureau.
The Background: The bill, H.R. 6789, was introduced last week by Rep. Andy Barr [R-Kent.] and has been referred to the House Financial Services Committee for review. Text of the actual proposed legislation is not yet available on either Congress’s website, nor was it included in a press release from Rep. Barr’s office announcing the bill.
- The bill does have 14 cosponsors, all of them Republicans.
- In the release, Rep. Barr says that the proposed legislation would reform the UDAAP authority granted to the CFPB by the Consumer Financial Protection Act “to provide certainty for lenders and credit providers.”
- Reading between the lines of Rep. Barr’s release, it appears as though the proposed legislation would deal with how the term “abusive” is defined under the law. In most cases, state and federal laws cover what are known as Unfair or Deceptive Acts or Practices (UDAP). It was the Consumer Financial Protection Act that added the second “A” for “abusive” without defining it. There have been attempts through the years to define what constitutes an abusive act or practice, but nothing has ever officially been done to define the term.
That’s What He Said: “Since the Dodd-Frank Act passed, financial institutions and providers have been left without clarity of the definition for the term “abusive,” and inadequate guidance from Bill CFPB on what would constitute a UDAAP violation. Regulatory uncertainty leads to fewer choices and higher prices for consumers, and the agency tasked with protecting consumers should not be complicit in regulation that is causing these outcomes,” said Rep. Andy Barr, in a statement. “My legislation, the Rectifying Undefined Definitions of Abusive Acts or Practices or the Rectifying UDAAP Act, requires the CFPB to provide the transparency financial institutions need to serve consumers and ensure there is ample access to credit in our consumer markets.”
Support: The bill appears to be supported by the American Bankers Association, the Consumer Banker Association, the Independent Community Bankers of America, the National Association of Federal Credit Unions, and the Credit Union National Association, each of which offered an endorsement in Rep. Barr’s announcement.