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Rectifying UDAAP Act
3/20/2025, 9:23 AM
Summary of Bill HR 1652
The bill seeks to address concerns about the lack of clarity and consistency in how the Bureau enforces UDAAP regulations. By establishing more specific standards for enforcement actions, the bill aims to provide greater transparency and predictability for financial institutions and consumers alike.
In addition to clarifying UDAAP enforcement standards, the bill also includes provisions for other purposes related to consumer financial protection. These additional provisions are not specified in the summary, but may include measures to enhance consumer rights, improve financial transparency, or strengthen regulatory oversight. Overall, Bill 119 hr 1652 represents an effort to enhance the effectiveness and fairness of consumer financial protection regulations by providing clearer guidelines for enforcement actions related to UDAAP. The bill is currently under consideration in the US Congress and may undergo further revisions before being enacted into law.
Congressional Summary of HR 1652
Rectifying Undefined Descriptions of Abusive Acts and Practices Act or the Rectifying UDAAP Act
This bill restricts the Consumer Financial Protection Bureau’s (CFPB’s) authority to deem a financial act or practice abusive for purposes of enforcement activities. Currently, the CFPB may take enforcement action against a financial product or service provider in connection with any transaction with a consumer for a consumer financial product or service that is unfair, deceptive, or abusive.
Specifically, the bill prohibits the CFPB from including discrimination as an abusive practice. Further, the bill revises what an abusive practice is, including by additionally requiring the practice to intentionally interfere with the ability of a consumer to understand a term or condition.
The bill also establishes additional criteria for abusive practices. Particularly, a practice is considered abusive if (1) it causes or is likely to cause substantial injury to consumers that is not reasonably avoidable by consumers, where timely disclosed conduct is presumed to be reasonably avoidable; or (2) the substantial injury is not outweighed by countervailing benefits to consumers or to competition.
The bill also eliminates the CFPB’s ability to seek monetary relief for unfair, deceptive, or abusive practices if the provider establishes a good faith effort to comply with requirements.
The bill establishes rulemaking requirements, including requiring a cost-benefit analysis for a rule relating to unfair, deceptive, or abusive practices.
Finally, the bill establishes the right for providers to cure violations if they self-report and limits the CFPB’s use of alternative claims in court.
