Financial Services Law Developments: FYI: CFPB Issues Statement of Policy On "Abusive" Conduct

Thursday, February 20, 2020

FYI: CFPB Issues Statement of Policy On "Abusive" Conduct

Following its enactment, the Dodd-Frank Act left the financial services industry with uncertainty in many areas. For example, for nearly 10 years, the industry has wondered and speculated about the inclusion of a prohibition against abusive acts and practices.

What exactly is abusive conduct? Is abusive conduct different from unfair, or false and misleading acts? How will the CFPB handle enforcement?

The Consumer Financial Protection Bureau recently announced the long-awaited policy statement regarding the framework that it will use in enforcement activities related to the category of "abusiveness."

A copy of the Statement of Policy is available here: Link to Statement of Policy

Overall, the objective attempts to use a common-sense view, and the principles are at least designed to promote compliance and certainty.

This theme is carried on with the delineated principles:

- In evaluating conduct, to be abusive, the harm to consumers should outweigh the benefit.

- Abusive conduct is distinguishable from unfair or deceptive violations; therefore, no "dual pleading."

- Monetary relief (penalties) for abusiveness only when there has been a lack of good-faith effort to comply. CAVEAT: restitution for injured consumer regardless of whether a company acted in good faith or bad.

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
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Chicago, Illinois 60602
Direct: (312) 551-9320
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Email: rwutscher@MauriceWutscher.com

Admitted to practice law in Illinois

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The Editor's Bio

Ralph T. Wutscher
Maurice Wutscher LLP
20 N. Clark Street, 33rd Floor
Chicago, Illinois 60602
Direct: (312) 493-0874
RWutscher@MauriceWutscher.com
https://www.MauriceWutscher.com/

Ralph Wutscher's practice focuses primarily on representing depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, distressed asset buyers and sellers, loss mitigation companies, automobile and other personal property secured lenders and finance companies, credit card and other unsecured lenders, and other consumer financial services providers. He represents the consumer lending industry as a litigator, and as regulatory compliance counsel.

Ralph has substantial experience in defending private consumer finance lawsuits, including cases ranging from large interstate putative class actions to localized single-asset cases, as well as in responding to regulatory investigations and other governmental proceedings. His litigation successes include not only victories at the trial court level, but also on appeal, and in various jurisdictions. He has successfully defended numerous putative class actions asserting violations of a wide range of federal and state consumer protection statutes. He is frequently consulted to assist other law firms in developing or improving litigation strategies in cases filed around the country.

Ralph also has substantial experience in counseling clients regarding their compliance with federal laws, and with state and local laws primarily of the Midwestern United States. For example, he regularly provides assistance in connection with portfolio or program audits, consumer lending disclosure issues, the design and implementation of marketing and advertising campaigns, licensing and reporting issues, compliance with usury laws and other limitations on pricing, compliance with state and local “predatory lending” laws, drafting or obtaining opinion letters on a single- or multi-state basis, interstate branching and loan production office licensing, evaluations and modifications of new or existing products and procedures, debt collection and servicing practices, proper methods of responding to consumer inquiries and furnishing consumer information, as well as proposed or existing arrangements with settlement service providers and other vendors, and the implementation of procedural or other operational changes following developments in the law.

Ralph is a member of the Governing Committee of the Conference on Consumer Finance Law. He is also the immediate past Chair of the Preemption and Federalism Subcommittee for the ABA's Consumer Financial Services Committee. He served on the Law Committee for the former National Home Equity Mortgage Association, and completed two terms as Co-Chair of the Consumer Credit Committee of the Chicago Bar Association.

Ralph received his Juris Doctor from the University of Illinois College of Law, and his undergraduate degree from the University of California at Los Angeles (UCLA). He is a member of the national Mortgage Bankers Association, the American Bankers Association, the Conference on Consumer Finance Law, DBA International, the ACA International Members Attorney Program, as well as the American and Chicago Bar Associations.

Ralph is admitted to practice in Illinois, as well as in the United States Court of Appeals for the Seventh Circuit, the United States District Courts for the Northern and Southern Districts of Illinois, and the United States District Court for the Eastern District of Wisconsin, and has been admitted pro hac vice in various jurisdictions around the country.