CFPB Rescinds Abusiveness Statement; Discusses Stimulus

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The Consumer Financial Protection Bureau (CFPB) announced it is rescinding its Jan. 24, 2020 policy statement, “Statement of Policy Regarding Prohibition on Abusive Acts or Practices.” Going forward, the CFPB intends to exercise its supervisory and enforcement authority consistent with the full scope of its statutory authority under the Dodd-Frank Act as established by Congress. The CFPB has made these changes to better protect consumers and the marketplace from abusive acts or practices, and to enforce the law as Congress wrote it.

Congress defined abusive acts or practices in section 1031(d) of the Dodd-Frank Act. Paraphrasing Congress, that standard prohibits companies from:

  • Materially interfering with someone’s ability to understand a product or service;
  • Taking unreasonable advantage of someone’s lack of understanding;
  • Taking unreasonable advantage of someone who cannot protect themselves; and
  • Taking unreasonable advantage of someone who reasonably relies on a company to act in their interests.

The 2020 Policy Statement was inconsistent with the Bureau’s duty to enforce Congress’s standard and rescinding it will better serve the CFPB’s objective to protect consumers from abusive practices.

For example, the 2020 Policy Statement stated that the CFPB would decline to seek civil money penalties and disgorgement for certain abusive acts or practices. The CFPB deters abusive practices and compensates certain harmed consumers using penalties, so the Policy Statement undermined deterrence and was contrary to the CFPB’s mission of protecting consumers.

Going forward, the CFPB intends to consider good faith, company size, and all other factors it typically considers as it uses its prosecutorial discretion. But a policy of declining to enforce the full scope of Congress’s definition of an abusive practice harms both the consumers who were taken advantage of and the honest companies that have to compete against those that violate the law.

The rescission of the Policy Statement can be found here.

CFPB: Allow Stimulus Payments to Reach Consumers
CFPB Acting Director Dave Uejio issued a statement regarding consumers’ access to Economic Impact Payment (EIP) funds distributed through the American Rescue Plan:

“The Consumer Financial Protection Bureau is squarely focused on addressing the impact of the COVID-19 pandemic on economically vulnerable consumers and is looking carefully at the stimulus payments that millions are now receiving through the American Rescue Plan. The Bureau is concerned that some of those desperately needed funds will not reach consumers, and will instead be intercepted by financial institutions or debt collectors to cover overdraft fees, past-due debts, or other liabilities.

“In recent days, many financial industry trade associations in dialogue with the CFPB have said they want to work with consumers struggling in the pandemic. Many of these organizations have told us they have begun or soon will take proactive measures to help ensure that consumers can access the full value of their stimulus payments. If payments are seized, many financial institutions have pledged to promptly restore the funds to the people who should receive them. We appreciate these efforts, which recognize the extraordinary nature of this crisis and the extraordinary financial challenges facing so many families across the country.

“I applaud the actions of our state partners, who have taken rapid action and concrete measures to protect stimulus funds. We will remain in touch with them to better understand the effectiveness of these actions. I’ll also stay in touch with the Bureau’s consumer stakeholders who provide valuable ‘voice of the consumer’ insight on problems with accessing their stimulus payments. The Bureau will continue to closely monitor consumer complaint data and other information that will help us to better understand how these issues are affecting consumers.

“The bureau will stay closely engaged on this issue as the COVID relief payment rollout continues.”

Consumer Resources
Consumers should monitor their bank and credit union accounts or use the IRS’s Get My Payment tool to confirm EIP funds have been deposited into their accounts. In addition, a new CFPB consumer advisory offers advice on steps consumers can take if they believe their bank or credit union has withheld their stimulus payment to cover an overdrawn account balance. Consumers should also be aware of scams and not give personal or banking information to unsolicited callers claiming to help with relief payments.

If consumers have a problem with their financial products or services, they can reach out directly to the company. Companies can usually answer questions unique to their situations and more specific to the products and services they offer. The CFPB can help consumers connect with companies about complaints. Consumers can submit complaints to the CFPB online or by calling (855) 411-2372.

Industry Resources
The bureau’s COVID-19 Prioritized Assessments Special Edition of Supervisory Highlights addressed, among other things, observations related to deposit accounts and stimulus payments.

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