Bureau rescinds January 2020 statement limiting response to ‘abusive’ practices

A policy announced during the Trump administration that limited the extent of the consumer financial protection agency’s response to certain abusive acts or practices affecting consumers was rescinded Thursday, the agency announced.

In a release, the Consumer Financial Protection Bureau (CFPB) said it intends now to “exercise its supervisory and enforcement authority consistent with the full scope of its statutory authority under the Dodd-Frank Act as established by Congress.”

The release said the bureau intends these changes “to better protect consumers and the marketplace from abusive acts or practices, and to enforce the law as Congress wrote it.”

The January 2020 statement, issued under the leadership of then-CFPB Director Kathleen Kraninger, was presented as a “common-sense” approach to carrying out the act’s provisions regarding abusive acts. Among the principles presented was that the bureau, in its supervision and enforcement activities, would focus on citing or challenging conduct as abusive in supervision and enforcement matters only when the harm to consumers outweighs the benefit.

According to Thursday’s release, that earlier statement “was inconsistent” with the CFPB’s duty to enforce the standard set by Congress.

“The CFPB deters abusive practices and compensates certain harmed consumers using penalties,” the bureau said in the release, “so the Policy Statement undermined deterrence and was contrary to the CFPB’s mission of protecting consumers.”

“Going forward, the CFPB intends to consider good faith, company size, and all other factors it typically considers as it uses its prosecutorial discretion,” said the bureau, now led by Acting Director David Uejio. “But a policy of declining to enforce the full scope of Congress’s definition of an abusive practice harms both the consumers who were taken advantage of and the honest companies that have to compete against those that violate the law.”

Uejio has been leading the CFPB in acting capacity since Jan. 20. The president’s nomination of Rohit Chopra as CFPB director, replacing former Director Kathleen Kraninger, was reported out by the Senate Banking Committee Wednesday, on a tie vote, and awaits Senate action.

Notice of rescission in Federal Register

Consumer Financial Protection Bureau Rescinds Abusiveness Policy Statement to Better Protect Consumers

RR: Bureau outlines how it will address ‘abusive’ acts, says possibility open for future rulemaking (Jan. 24, 2020)