Rectifying UDAAP Act
Rectifying UDAAP Act
Plain Language Summary
# Rectifying UDAAP Act Summary **What the Bill Would Do:** This bill would limit the power of the Consumer Financial Protection Bureau (CFPB), a government agency that oversees consumer financial protection. Currently, the CFPB can take action against banks, lenders, and other financial companies if their practices are unfair, deceptive, or abusive. This bill would narrow what counts as "abusive," making it harder for the CFPB to enforce rules.
Specifically, it would prevent the CFPB from treating discrimination as an abusive practice and would require that abusive practices must *intentionally* confuse consumers about important terms—not just accidentally mislead them. **Who It Affects:** The bill would primarily affect financial companies (banks, credit card companies, payday lenders, etc.) by reducing regulatory oversight, and secondarily affect consumers by potentially limiting protections against unfair financial practices. Consumer advocacy groups would likely oppose the bill, while the financial industry might support it. **Current Status:** The bill was introduced in the 119th Congress by Rep. Andy Barr (R-KY) and is currently in committee, meaning it has not yet been voted on by the full House of Representatives.
CRS Official Summary
Rectifying Undefined Descriptions of Abusive Acts and Practices Act or the Rectifying UDAAP Act This bill restricts the Consumer Financial Protection Bureau’s (CFPB’s) authority to deem a financial act or practice abusive for purposes of enforcement activities. Currently, the CFPB may take enforcement action against a financial product or service provider in connection with any transaction with a consumer for a consumer financial product or service that is unfair, deceptive, or abusive.Specifically, the bill prohibits the CFPB from including discrimination as an abusive practice. Further, the bill revises what an abusive practice is, including by additionally requiring the practice to intentionally interfere with the ability of a consumer to understand a term or condition.The bill also establishes additional criteria for abusive practices. Particularly, a practice is considered abusive if (1) it causes or is likely to cause substantial injury to consumers that is not reasonably avoidable by consumers, where timely disclosed conduct is presumed to be reasonably avoidable; or (2) the substantial injury is not outweighed by countervailing benefits to consumers or to competition.The bill also eliminates the CFPB’s ability to seek monetary relief for unfair, deceptive, or abusive practices if the provider establishes a good faith effort to comply with requirements. The bill establishes rulemaking requirements, including requiring a cost-benefit analysis for a rule relating to unfair, deceptive, or abusive practices.Finally, the bill establishes the right for providers to cure violations if they self-report and limits the CFPB’s use of alternative claims in court.
Latest Action
Referred to the House Committee on Financial Services.