CFPB Continues Enforcement Ramp-up With Latest Policy Change

The Consumer Financial Protection Bureau (CFPB) announced on Thursday that it has rescinded its January 24, 2020 policy statement regarding prohibition on abusive acts or practices, saying that the move is being made in order to “better protect consumers and the marketplace from abusive acts or practices, and to enforce the law as Congress wrote it.”

The move, a rebuke to policies governing such acts under the administration of Former President Donald Trump, stands as another sign that the Bureau is aiming to return to the regulatory posture it held coming out of the 2008 financial crisis that led to its creation, and is now more closely aligned with priorities exhibited under the leadership of Former President Barack Obama and inaugural CFPB Director Richard Cordray.

In describing the former policy statement issued under the auspices of Former Director Kathleen Kraninger, the Bureau describes the prior policy as “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,” the CFPB said in a statement announcing the move.

 As an example, the Bureau cited the previous policy statement that said the CFPB would “decline to seek civil money penalties and disgorgement” for certain abusive acts or practices, which the Bureau now says is misaligned with its philosophy on the use of its enforcement authority.

“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,” the statement said.

Going forward, the Bureau will consider “good faith, company size, and all other factors it typically considers as it uses its prosecutorial discretion,” the statement reads.

However, keeping a policy in place that declines to enforce the complete scope of the Bureau’s authority and the definition of what constitutes an abusive practice under the law is harmful for consumers, the Bureau now says.

“[It is harmful to] both the consumers who were taken advantage of and the honest companies that have to compete against those that violate the law,” the statement reads.

This is the latest policy change instituted at the Bureau under President Joe Biden, which saw Former Director Kraninger resign shortly after the president assumed office and other policy changes spearheaded by Acting CFPB Director Dave Uejio.

Biden’s full-time CFPB Director nominee, Rohit Chopra, is currently undergoing the Senate confirmation process and is awaiting a final vote.

The full rescission of the policy can be read at the CFPB website.

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