The Consumer Financial Protection Bureau (CFPB) has issued a policy statement outlining legal prohibitions regarding abusive conduct in consumer financial markets.
Authorities noted the offering also summarizes more than a decade of precedent in accordance with the Consumer Financial Protection Act.
“In response to the predatory mortgage lending practices that drove the financial crisis, Congress banned abusive conduct in consumer financial markets,” CFPB Director Rohit Chopra said. “The CFPB issued guidance to provide an analytical framework to help federal and state agencies hold companies accountable when they violate the law and take advantage of families.”
Per the CFPB, the guidance seeks to assist consumer financial protection enforcers in identifying wrongdoing while aiding firms to avoid committing abusive acts or practices.
The CFPB has outlined, via the guidance, abusive conduct generally includes obscuring important features of a product or service or leveraging certain circumstances that include gaps in understanding, unequal bargaining power, or consumer reliance to take unreasonable advantage.
Additionally, the guidance determines how the use of dark patterns; set-up-to-fail business models such as those observed before the mortgage crisis; profiteering off captive customers; and kickbacks and self-dealing can be abusive.
“Producing clearer and simpler guidance is an important goal for the CFPB,” Chopra said during recent prepared remarks at the University of California Irvine Law School. “This philosophy is one that I’ve tried to advance across all of our work. “We aspire to more clearly communicate the CFPB’s expectations in straightforward terms. This helps strengthen the posture of all companies that we regulate, not just those with the most market power or resources.”