The Consumer Financial Protection Bureau (CFPB) has rescinded a policy statement issued in January 2020 to better protect consumers from abusive acts or practices.
Specifically, the CFPB rescinded its “Statement of Policy Regarding Prohibition on Abusive Acts or Practices.” CFPB officials said the 2020 policy statement was inconsistent with the bureau’s duty to enforce Congress’s standard. Rescinding it will better serve the CFPB’s objective to protect consumers from abusive practices.
Initially, when the CFPB was created, Congress defined abusive acts or practices as: 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, for example, stated that the CFPB would decline to seek civil money penalties and disgorgement for certain abusive acts or practices.
The CFPB is charged with deterring abusive practices and compensating certain harmed consumers using penalties, so the 2020 policy statement undermined deterrence and was contrary to the CFPB’s mission of protecting consumers.
CFPB officials said the bureau 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.
Rep. Blaine Luetkemeyer (R-MO) took exception to the recession of the policy statement put in place by former CFPB Director Kathy Kraninger.
“Director Kraninger’s policy statement gave the CFPB the tools it needed to cultivate compliance and protect consumers from abusive practices. By eliminating this statement, the Biden Administration appears to be reverting to a time when consumer protections and sound regulation took a backseat to ideological crusades. These actions make the Bureau less able to prevent consumer harm while fostering financial products that benefit consumers,” Luetkemeyer said.