The government regulatory agency, Consumer Financial Protection Bureau (CFPB), released a policy statement about how it will define “abuse” during its supervision and enforcement of the Dodd-Frank Act.
When does it go into effect? Immediately.
How is the CFPB Defining Abuse of the Rules?
When it is identifying a business’s abuse or misconduct, the Bureau will use the following concepts:
- The harm to consumers is greater than the benefit.
- If the Bureau has already cited an unfair or deceptive activity, it will avoid another violation for the same citation, or “dual pleading.”
- Only seek financial penalties when a business isn’t acting in good faith to comply with the law unless the violation is about a practice that harmed consumers.
How does this apply to me? Do I need to do anything?
This provides some guidance around your lending practices. Previously, the CFPB could subjectively decide if a dealer or lender was doing bad business, but now we all have some rules to live by.
Ensure that your dealership and any of your lenders are providing services that help consumers and protect their interests. It’s all about your good faith effort and good business.