On Tuesday, June 25, the Consumer Financial Protection Bureau (the “CFPB”) convened the first in a new series of symposia on consumer protection topics. The symposium series was announced in Director Kathleen Kraninger’s first major speech as the Bureau’s Director on April 17, 2019. The intent of the series is to initiate dialogue with stakeholders that will inform the Bureau’s future rulemakings. The topic of the first symposium, in which our colleague Eric Mogilnicki participated, was the meaning of “abusive acts or practices” under section 1031 of the Dodd–Frank Act. The “abusive” standard has been on the Bureau’s rulemaking agenda since the fall of 2018. 

The June 25 symposium consisted of two panels of UDAAP experts: one panel primarily composed of academic experts, and a second panel composed of experienced practitioners. Additionally, both Director Kraninger and Deputy Director Brian Johnson gave remarks.

In her welcoming remarks, Director Kraninger discussed the Bureau’s statutory authority to protect consumers from unfair, deceptive, or abusive acts or practices (“UDAAP”). Although the “unfair” and “deceptive” standards have been substantially developed over time (primarily by the Federal Trade Commission), the “abusive” standard does not have a significant history. In his remarks following the first panel, Deputy Director Johnson described some of the changes that have taken place at the Bureau over the past two years, and emphasized that the Bureau remains committed to its consumer protection mission, as exemplified by the symposium.

Although the Dodd–Frank Act contains a four-part definition of “abusive,” the Bureau has rarely alleged abusive acts or practices in its enforcement actions, and almost always has done so in conjunction with allegations of unfair and/or deceptive practices. As a result, there is uncertainty as to what constitutes abusiveness. For example, the academic panelists debated whether a finding of abusiveness requires there to be consumer harm and/or scienter on the part of the relevant company. Eric Mogilnicki and several other practitioner panelists urged the Bureau to provide additional guidance regarding the “abusive” standard, citing contradictions in the Bureau’s enforcement actions and the relative paucity of court decisions defining the term.

The panelists’ written statements are available on the CFPB website, with video of the symposium forthcoming.