The Bureau of Consumer Financial Protection (Bureau) published a policy statement seeking to elaborate on the “abusiveness standard” as used in the Dodd-Frank Act’s prohibition of abusive acts or practices with respect to consumer financial products and services. The Bureau concluded that the abusiveness standard is uncertain in its scope and meaning as the Dodd-Frank Act only defines this standard in general terms and does not provide a complete list of abusive practices. The Bureau intends to approach its use of the abusiveness standard in its supervision and enforcement matters with the following:

  • The Bureau intends to focus on citing conduct as abusive in supervision or challenging conduct as abusive in enforcement if the Bureau concludes that the harms to consumers from the conduct outweigh its benefits to consumers.
  • The Bureau will generally avoid challenging conduct as abusive that relies on all or nearly all of the same facts that the Bureau alleges are unfair or deceptive. Where the Bureau decides to include an alleged abusiveness violation, the Bureau intends to plead such claims in a manner designed to clearly demonstrate the nexus between the cited facts and the Bureau’s legal analysis of the claim. In its supervision activity, the Bureau similarly intends to provide more clarity as to the specific factual basis for determining that a covered person has violated the abusiveness standard.
  • The Bureau generally does not intend to seek certain types of monetary relief for abusiveness violations where the covered person was making a good-faith effort to comply with the abusiveness standard.

This policy statement is a general policy statement of the Bureau’s general plans to exercise its discretion and does not impose any new legal requirements. The policy statement becomes applicable on January 24, 2020.