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Financial Services Law Insights and Observations

States endorse CFPB’s policy statement on abusive conduct

State Issues Federal Issues State Attorney General CFPB CFPA UDAAP Abusive Consumer Finance

State Issues

On July 6, the California attorney announced that he had joined a coalition of state attorneys general in submitting a comment letter endorsing the CFPB’s recently issued policy statement on abusive conduct in consumer financial markets. The multi-state coalition comprises Arizona, California, Colorado, Connecticut, the District of Columbia, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, and Wisconsin. In April, the Bureau issued a policy statement containing an “analytical framework” for identifying abusive conduct prohibited under the Consumer Financial Protection Act, in which it broadly defined abusive conduct as anything that obscures, withholds, de-emphasizes, renders confusing, or hides information about the key features of a product or service. (Covered by InfoBytes here.)

In their letter, the state attorneys general emphasized the importance of preventing abusive conduct in consumer financial markets and highlighted the partnership between states and the Bureau in achieving this goal. The states also commended the Bureau for providing a clear, analytical framework for what constitutes abusive acts or practices and expressed appreciation for the agency’s use of real enforcement actions as examples of illegal abusive conduct. The multi-state coalition applauded the flexibility and guidance provided by the policy statement and complimented the Bureau for acknowledging the realities of modern consumer markets by clarifying that both acts and omissions can hinder consumers’ understanding of terms and conditions, including the use of fine print or complex language that limits comprehension.