Approximately half of more than 40 enforcement issues made public by the Consumer Financial Protection Bureau have alleged violations of the Unfair, Deceptive and Abusive Acts or Practices (UDAAP) provision of the Dodd-Frank Act, according to a recent ACA International seminar based on data available in November.
But the CFPB’s increasing reliance on what many believe to be a provision full of vague language has been a collection industry concern.
The CFPB has published two bulletins on UDAAP since 2013. The bulletins offer statutory definitions, provide examples of UDAAPs and remind companies that aren't subject to the Fair Debt Collection Practices Act, such as first-party collectors, that they’re nevertheless subject to the CFPB’s UDAAP authority.
While the CFPB's UDAAP enforcement actions have resulted in restitution to consumers of more than $1.7 billion, as well as civil penalties totaling more than $142 billion, what actually constitutes a UDAAP offense isn’t always clear. UDAAP language is broad and many in credit and collections believe CFPB is using it’s regulatory authority to challenge conduct it finds troubling but might not be a violation of any express legal requirement.
Based on the bulletins, some examples of UDAAP violations include: collecting or assessing a debt and/or any additional amount in connection with debt not expressly authorized by the agreement creating the debt or permitted by law; failing to post payments timely or properly credit a consumer’s account; and revealing the consumer’s debt to a third party without the consumer’s consent.
UDAAPs were addressed in the CFPB's Advanced Notice of Proposed Rulemaking for the collection industry in 2013. They're expected to be part of the debt collection proposed rule when those in the collection industry hope more clarity will be provided.
The CFPB updated its regulatory agenda in November and announced that it expects pre-rule activities for debt collection to last through February 2016, though timing for release of an actual proposed rule is not known.