CFPB Rescinds Abusiveness Policy Statement

The CFPB recently rescinded their January 21, 2020, policy statement, citing concerns that the statement limited the Bureau’s ability to exercise the full scope of its supervisory and enforcement authority to stop abusive practices.

The rescinded policy statement provided a framework for the CFPB’s exercise of its supervisory and enforcement authority to address abusive acts or practices.  The rescinded policy statement intended to do three things.  First, the CFPB would apply a cost benefit analysis to alleged abusive conduct to determine liability.  Second, the CFPB would generally avoid challenging conduct as abusive if the CFPB relied on all or nearly all of the same facts that were alleged as unfair or deceptive.  Third, the CFPB would not seek monetary damages for alleged abusive conduct if the actor was making a good-faith effort to comply with abusiveness standard.

The CFPB stated that the rescinded policy statement only provided market participants with uncertainty and slowed the CFPB’s ability to clarify the statutory abusiveness standard.  Going forward, the CFPB stated that it intends to apply the full scope of Congress’s definition of an abusive practice through the use of money penalties and disgorgement.