Winter 2019-2020 Hot Topics

CFPB Issues Policy Statements on “Abusive Acts or Practices” Standard and on Treatment of “Compliance Aids”

The CFPB issued a policy statement indicating it intends to follow three principles when applying the “abusiveness” standard in supervision and enforcement matters, to promote certainty and compliance. The principals are: (1) to focus on citing conduct as abusive if the CFPB concludes the harm to consumers outweighs its benefits; (2) to avoid challenging conduct as abusive that relies on the same facts that allege unfair or deceptive allegations, and to provide the nexus between the facts and claims; and (3) to seek monetary relief only if there was a lack of a good-faith effort to comply with the abusiveness standard.

Going forward, the CFPB’s guidance materials will be referred to as “Compliance Aids,” to provide clarity regarding the legal status and role of the materials. That is, the CFPB does not intend to use the Compliance Aids to bind regulated entities, since they are not “rules” under the Administrative Procedures Act, but rather to provide practical suggestions and useful material for compliance.

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