CFPB Symposium Highlights Need for “Abusive” Standard

The Consumer Financial Protection Bureau (CFPB) on June 25 held the first in its evolving symposia series, dealing with the term “abusive” and if the Bureau should use its rulemaking authority to further define the term. The Federal Trade Commission (FTC) has developed the “unfair” and “deceptive” portions of UDAAP (Unfair, Deceptive, Abusive Acts and Practices), but “abusive” has remained vague.

Two panels featured a variety of regulatory and industry experts, who engaged in a robust debate on the term. Questions, such as, “What is the term tied to, the suitability of a product or a specific industry?” “Is ‘abusive‘ better defined as an example rather than a strict definition?” “Is there overlap with ‘unfair’ and ‘deceptive’ or are the terms distinct?

The form of any guidance was also debated; several panelists argued for no-action letters, while others advocated for a more permanent statement of policy with a concrete rule to follow.

AFSA has long argued for the need to define the term, and the symposium also highlighted AFSA’s ongoing engagement with the CFPB on this issue, as we, along with other stakeholders worked to shape the agenda for the program. The bureau’s current “you know it when you see it” approach does not offer consumer-credit lenders enough regulatory certainty. Regulatory uncertainty leads to a cautious posture, restricting the availability to credit, which in turn hurts consumers.

AFSA commends the bureau for kick starting the conversation about the “abusive” standard and looks forward to continuing to work with the bureau to produce a workable standard.