The CFPB is using enforcement actions rather than rulemaking to clarify what it means by “abusive” acts or practices, an outside counsel report from ABA’s American Bankers Insurance Association (ABIA) subsidiary remarked.
The CFPB recently used its powers under the Dodd-Frank Act to prohibit an “abusive” act or practice, a term added to the long-understood “unfair and deceptive” standard but that remains unclear. In an action against a Florida debt settlement company, the CFPB’s allegations of abusive acts or practices relied on two aspects of Dodd-Frank’s “abusive” definition: taking “unreasonable advantage of” customers’ “lack of understanding,” and consumers’ “reasonable reliance” on the efficacy of the firm’s services.
“Banks engaged in the sale of insurance should be aware of the circumstances under which acts or practices they use could be considered ‘abusive’ by the CFPB,” the report concluded.
Read the report.
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