Press "Enter" to skip to content

What is ‘Abusive’ Conduct Under Dodd-Frank? CFPB Provides an Answer by Issuing Its Policy on Abusive Acts and Practices

cfpb policy on dodd-frank actFollowing its enaction, the Dodd-Frank Act left the financial services industry with uncertainty in many areas. For nearly 10 years, the industry has wondered and speculated about the inclusion of a prohibition against abusive acts and practices.  What exactly is abusive conduct? Is abusive conduct different from false and misleading acts or unfairness? How will the CFPB handle enforcement?

On Jan. 24, the Consumer Financial Protection Bureau announced the long-awaited policy statement regarding the framework that it will use in enforcement activities related to the catch-all category of “abusiveness.”

At the get-go, the objective demonstrates a common-sense view: the principles are designed to promote compliance and certainty. This theme is carried on with the delineated principles:

  • In evaluating conduct, to be abusive, the harm to consumers should outweigh the benefit.
  • Abusive conduct is distinguishable from unfair or deceptive violations; therefore, no “dual pleading.”
  • Monetary relief (penalties) for abusiveness only when there has been a lack of good-faith effort to comply. CAVEAT: restitution for injured consumer regardless of whether a company acted in good faith or bad.

The full policy may be found here.

Print Friendly, PDF & Email

Jessica Lesser is Of Counsel to Maurice Wutscher in Dallas. Jessica is a proven civil trial attorney with expertise in the regulatory framework of consumer finance, lending, and technology. A former managing attorney in the Consumer Protection Division of the Office of the Attorney General of Texas, she has two decades of litigation and regulatory compliance experience and is board certified in consumer and commercial law. Her leadership roles in private practice, state government, and within corporations demonstrate her adaptability and ability to provide solutions in highly regulated environments. Her extensive litigation experience provides for efficient and responsive results that are customized to a client’s needs. Jessica is the former chair of the Texas Board of Legal Specialization Advisory and Exam Commission for the consumer and commercial law specialization exam and past chair of the Consumer and Commercial Law Section, State Bar of Texas.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.