The Consumer Financial Protection Bureau's (CFPB) continued and expanded reliance on its sweeping authority to prohibit unfair, deceptive, and abusive acts or practices (UDAAP)1 continues to command the attention of financial institutions and financial services companies regulated by the agency. As promised by CFPB Director Richard Cordray,2 the CFPB has defined UDAAP primarily through enforcement actions, along with a few agency-issued supervisory findings and guidance bulletins. The number of CFPB UDAAP enforcement actions nearly doubled from 2013 to 2014. In 2014, the CFPB made public 23 enforcement actions based in whole or in part on alleged UDAAP violations.
To assist regulated and potentially regulated entities in understanding how the CFPB will exercise its UDAAP authority, we issued our "Know It When You See It" Client Alert in June 2014. That Alert included a chart listing the specific acts and practices that the CFPB had alleged and/or identified as unfair, deceptive, and/or abusive from its inception to May 2014 based on the following sources:
- CFPB Consent Orders based in whole or in part on alleged UDAAP violations;
- Agency enforcement actions filed in federal court;
- Specific prohibited practices cited in the CFPB's Examination Manual, derived in part from substantive statutes and regulations and previous FTC guidance; and
- Guidance in agency-issued bulletins and similar informal statements that reflect the CFPB's UDAAP priorities.
The CFPB has increased the pace of UDAAP enforcement activity significantly since then. The number of enforcement action filings increased from four in the first half of 2014 to 19 in the second half of 2014. Given the critical need to keep up with the CFPB's ever-expanding interpretation of the scope of UDAAP, we have updated our previous "Know It When You See It" chart (attached)3 through the end of 2014.
Neither the allegations in enforcement actions nor recitations in consent orders are potentially binding against any party other than the respondent or defendant in the case or proceeding. Thus far, there has been only one case in which a court has ruled on the merits in finding a covered person violated UDAAP.4 The CFPB's informal bulletins or statements ordinarily are not binding legal precedent. Nevertheless, the CFPB's activities provide guideposts for regulated entities seeking to conform to industry standards and mitigate risks of being charged with UDAAP in a proceeding brought by the CFPB.
Footnotes
1 12 U.S.C. §§ 5531, 5536.
2 See, e.g., Kate Davidson, "Trying to Stay Above Politics: A Conversation with Richard Cordray," The American Banker (Mar. 23, 2012).
3 New entries in the chart, representing CFPB activities in the latter half of 2014, are highlighted in blue.
4 CFPB v. Chance Gordon et al., CV 12-6147 RSWL (MRWx), Minute Order (C.D. Cal. June 26, 2013).
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