On April 3, 2023, the CFPB issued a policy statement that explains the legal prohibition on abusive conduct in consumer financial markets and summarizes over a decade of precedent. The policy statement details post-financial crisis prohibition on illegal abusive conduct. It aims to assist consumer financial protection enforcers in identifying wrongdoing, and will help firms avoid committing abusive acts or practices.
In 2010, Congress passed the Consumer Financial Protection Act and gave the CFPB, along with the federal banking regulators and states, the responsibility to enforce the prohibition on abusive conduct, and put the CFPB in charge of administering it. According to the CFPB, the Bureau has brought 43 cases since the passage of the Act, and examiners have issued numerous citations, alleging abusive conduct.
The policy statement regarding prohibition on abusive acts or practices builds on the agency’s actions as well as summarizes the meaning of the statutory prohibition on abusive conduct in clear and simple terms. The policy sets forth how abusive conduct generally includes obscuring important features of a product or service or leveraging certain circumstances to take unreasonable advantage. The statement particularly describes how the use of dark patterns, set-up-to-fail business models, profiteering off captive customers, and kickbacks and self-dealing can be abusive.
The policy statement will be published in the Federal Register, and public comments will be accepted until July 3, 2023.
Read the CFPB’s announcement here.
The Policy Statement can be found here.