Rep. Blaine Luetkemeyer (R-Mo.) has introduced a bill that would amend the Consumer Financial Protection Bureau’s (CFPB) authority to take action against unfair, deceptive or abusive acts or practices (UDAAP).
Introduced April 28, the Unfair or Deceptive Acts or Practices Uniformity Act (H.R. 5112) would amend Title X of the Dodd-Frank Act (also known as the Consumer Financial Protection Act) so that the CFPB’s UDAAP authority will be consistent with and similar to the Federal Trade Commission’s (FTC) Section 5 authority under the FTC Act.
Specifically, the bill aims to eliminate the abusiveness standard under UDAAP, a standard that has created a lot of compliance questions among industry members.
Abusive acts or practices were not included within the FTC Act, but are defined by Section 1031(d) of the Dodd-Frank Act as being acts or practices that either “materially interferes” with the consumer’s ability to understand a term or condition of a consumer financial product or service, or “takes unreasonable advantage of a lack of understanding on the part of the consumer of the material risks, costs or conditions of the product or service; the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service; or the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.”
Questions that arise include: What is a reasonable consumer? And what does a reasonable consumer understand?
The bill currently has no co-sponsors but has been referred to the House Financial Services Committee.
Want to know more about the CFPB’s UDAAP authority? Subscribers can check out Dodd Frank Update’s special report: Uncovering the Shadows of UDAAP.