Vaishali Rao Reviews Operational Lessons Provided by the CFPB's Application of the 'Abusive' Acts Prohibition under Dodd-Frank
July 30, 2019
In a Law360 Expert Analysis, Hinshaw partner Vaishali Rao reviews practical lessons offered by the Consumer Financial Protection Bureau's handling of the Dodd-Frank Act's prohibition on 'abusive' acts or practices. In particular, Rao reviews a recent CFPB symposium of legal experts and practitioners, which considered the bureau's application of the abusive standard over the course of its close to 10-year existence.
Rao provides nine key takeaways from the symposium discussion, relevant for businesses that offer a financial product or service.
- No one agrees on how 'abusive' should be used, but one simple test (the "Grandma" test) still exists
- What consumers understand about your product or service matters
- A product's profits should not be dependent on a loophole
- Offering a product to consumers who need quick access to money or credit increases exposure to an abusive claim
- If you are litigating an abusive claim against the CFPB, you are in it past the pleading stage
- The bureau may issue guidance on the parameters of 'abusive'
- The future of abusive claims may relate to data, privacy or tech
- When unsure, consider testing the waters with a functional regulator
- Determining the appropriate balance of risk to reward requires judgment
Read the full article (PDF)
"What Does 'Abusive' Really Mean Under Dodd-Frank?" was published by Law360, July 25, 2019