Last year, the CFPB provided some answers to the question: What is abusive conduct? For 10 years, industry waited on a policy statement regarding the framework that the CFPB would use in enforcement related to the catch-all category of “abusiveness” only to have the CFPB rescind the policy statement citing that it intended to “exercise its supervisory and enforcement authority consistent with the full scope of its statutory authority under the Dodd-Frank Act.”
Posts published in “UDAP/UDAAP”
On March 26, the Texas attorney general acted swiftly, filing a lawsuit against Auctions Unlimited LLC over an online auction that ended on March 24. The auction sparked an article published by the Chicago Tribune entitled “more than 750,000 masks auctioned for huge markup in Texas while hospitals run out nationwide.”
Following 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?
The U.S. Court of Appeals for the Eighth Circuit recently reversed certification of a nationwide class involving allegedly deceptive advertising practices, holding that certification of a national class was inappropriate because the consumer protection laws of each class member’s home state governed their claims. The Eighth Circuit further held that class treatment was inappropriate due to the trial court’s failure to conduct separate choice of law analyses for the consumer class’s breach of warranty and unjust enrichment claims. A copy of the opinion in Hale v. Emerson Electric Company is available at: Link to Opinion. A group of consumers brought…
The U.S Court of Appeals for the Seventh Circuit recently held that charging too much for goods or services, standing alone, is insufficient to assert a claim under the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”). Accordingly, the Seventh Circuit affirmed the trial court’s dismissal of a putative class action filed by condominium owners related to fees charged by a property management company and its vendor to provide various documents required to be provided to prospective purchasers of condominium units. A copy of the opinion in Horist v. Sudler and Company is available at: Link to Opinion. The…
The U.S. Court of Appeals for the Eighth Circuit recently upheld the dismissal of an alleged data breach victim’s allegations under the Illinois Consumer Fraud and Deceptive Business Practices Act, the Illinois Personal Information Protection Act, and the Illinois Uniform Deceptive Trade Practices Act, as well as various common law claims. A copy of the opinion in Melissa Alleruzzo v. SuperValu, Inc. is available at: Link to Opinion. In June and July 2014, hundreds of retail grocery stores operated by three different entities (“grocers”) were hacked, resulting in the theft of customers’ card information, including their names, credit or debit card account…
The U.S. Court of Appeals for the Seventh Circuit affirmed a trial court judgment in favor of an online real estate marketplace company and against the sellers of real property, finding that an estimate on the website of their property’s value did not violate the Illinois Real Estate Appraiser Licensing Act because the licensing act does not provide a private right of action. The Seventh Circuit also affirmed the trial court’s judgment in favor of the company on the sellers’ Illinois Uniform Deceptive Trade Practices Act claim, holding that the estimate did not violate the act because an estimate is…
An online lender that extends payday and unsecured installment loans reached a settlement with the Consumer Financial Protection Bureau regarding “unfair, deceptive, or abusive acts or practices” allegations that the lender unlawfully debited consumers’ bank accounts without authorization and failed to honor loan extensions to its customers. Under the terms of the settlement and consent order, the lender is barred from making or initiating electronic fund transfers without valid authorization, and must pay a $3.2 million civil monetary penalty. A copy of the consent order is available at: Link to Consent Order. The respondent, an online lender, extends and services…
By Brent Yarborough and Eric Rosenkoetter On June 13, the Bureau of Consumer Financial Protection issued a consent order with a holding company and its affiliated operating entities engaged in consumer lending. The consent order reflects the parties’ settlement of an administrative enforcement action that focused on the lenders’ debt collection and credit reporting practices. The lenders neither admitted nor denied the Bureaus’ findings or conclusions, but as part of the settlement they are required, among other things, to pay a civil money penalty of $5 million and to refrain from making in-person visits for collection purposes. This is the second consent order…
In a data breach putative class action brought by financial institutions against a retail grocery store chain, the U.S. Court of Appeals for the Seventh Circuit recently held that the economic loss doctrine prevented recovery of economic losses in tort cases. Although the financial institutions had no direct contractual relationship with the retail grocery store chain, the Seventh Circuit noted that the banks and the merchant all participated in a network of contracts that tied together all the participants in the card payment system. In so ruling, the Seventh Circuit joined the Third and First Circuits in rejecting negligence theory…
The U.S. Court of Appeals for the First Circuit recently held that a borrower cannot invoke the discovery rule to assert an otherwise untimely Massachusetts UDAAP claim (Chapter 93A) relating to a loan modification agreement, because the alleged harm was not “inherently unknowable” at the time of its occurrence. In so ruling, the Court determined that the borrower knew he was required to make monthly payments when he signed the loan modification agreement. Therefore, the statute of limitations began to run when the borrower stopped making payments, not when the creditor provided notice of the default. A copy of the opinion…
The U.S. Court of Appeals for the Ninth Circuit recently reversed an award of summary judgment in favor of a mortgage loan servicer, holding that the evidence could support a verdict that the servicer engaged in an unfair business practice by accepting trial modification plan payments when it had previously determined the borrower was not eligible for a loan modification. A copy of the opinion Oskoui v. J.P. Morgan Chase Bank, N.A. is available at: Link to Opinion. A borrower defaulted on her mortgage loan, and later applied for a loan modification. The mortgage loan servicer sent her a letter…