Collector - April 2020 - 16

COLLECTIONTIPS

Measuring Up
The CFPB issues an update on what constitutes "abusive acts or practices."
By Angela Czerlanis

T

his year marks a decade since
the inception of the Consumer
Financial Protection Bureau's
authority over Unfair, Deceptive, or
Abusive Acts or Practices (UDAAP) under
the Dodd-Frank Wall Street Reform and
Consumer Protection Act.
What is UDAAP? In short, it aims to
curtail bad behavior in consumer financial
services for covered entities, which include
debt collectors and service providers
working with third-party collectors.
Examples of this behavior:
*	 Acts that cause or are likely to cause
substantial injury to consumers;
*	 Practices that interfere with consumers'
ability to understand the terms of a
financial product or service; or
*	 Practices that take unreasonable
advantage of the consumer's ability to
protect themselves against risks or costs
of a financial product or service.
The broad umbrella of UDAAP has
been subjective-"You just know it when
you hear or see it." The statute doesn't
list specific actions to avoid, only some
conditions of behavior.
How can you make sure you're not
running afoul of UDAAP? The Fair Debt
Collection Practices Act has three sections
that list harassing and abusive, false or
misleading, and unfair practices. This is a
good place to start when thinking about
UDAAP because specific actions are listed.

16

For example:
*	 Making an excessive number of phone
calls to a consumer is harassing.
*	 Disclosing personal information about
the debt to third parties is unfair.
*	 Lying about the collector's identity or
threatening legal action that cannot or
will not be taken is deceptive.
As you can see by comparing the
FDCPA's list to the UDAAP conditions,
it's possible to violate the FDCPA and
UDAAP at the same time. This is especially
challenging when trying to separate what
is "abusive" from what is "unfair" and/or
"deceptive."
That's where a new policy statement
from the CFPB, issued Jan. 24, 2020, hopes
to clarify things. Now, when the CFPB
looks at potential violations of UDAAP
during supervisory examinations or
investigations of alleged violations, it will:
*	 Focus on citing or challenging conduct
as "abusive" only when the harm to
consumers outweighs the benefit.
*	 Avoid classifying abusive behavior as
also unfair or deceptive, meaning that
the facts of the abuse violation must
"stand alone" from claims of unfairness
or deception.
*	 Apply a "good faith" standard when
seeking monetary relief for abusiveness.
This means that although the CFPB will
continue to seek restitution for injured
consumers, if the bureau determines that
a company made a good-faith effort to
comply with the abusiveness standard,

that effort will be considered despite the
UDAAP error.
For a closer look into the interpretation
of UDAAP and how the policy statement
was developed, check out an archived
video of the CFPB's symposium panel
discussion on abusive acts or practices
held June 25, 2019: http://bit.ly/37YnNs2.
Then take a deeper dive into UDAAP with
ACA International's Core course, Keep
Calm and Avoid UDAAP, available at
www.acainternational.org.
Angela Czerlanis is ACA International's
compliance education specialist.

ACAINTERNATIONAL.ORG


http://www.bit.ly/37YnNs2 http://www.acainternational.org http://www.ACAINTERNATIONAL.ORG

Collector - April 2020

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