CFPB Clarifies ‘Abusiveness’ Standard After Years of Lender Uncertainty

Initially introduced under the Dodd-Frank Act nearly 10 years ago, the Consumer Financial Protection Bureau has finally clarified its long held and often confusing “abusiveness” standard, used in its supervision and enforcement capacity.

The standard, which essentially allows the Bureau to take action against organizations deemed to be participating “abusive” acts or practices with respect to consumer financial services and products, has led to much uncertainty among industry players over the years — largely due to lack of detail around what qualifies as “abusive” under the agency’s watch.

“…nearly a decade after the [Dodd-Frank] Act became law, uncertainty remains as to the scope and meaning of abusiveness,” the CFPB notes, indicating that the uncertainty can be challenging for those seeking compliance with the law.


Historically, the agency has taken enforcement actions citing “unfair and abusive” practices, leading to what agency critics have deemed a building of precedence based upon enforcement rather than rule.

The policy statement released Friday provides a new framework for how the CFPB intends to apply its abusiveness standard going forward, specifically focusing on conduct as abusive only when the harm to consumer outweighs the benefit; generally avoiding “dual pleading” of violations based on the same facts; and seeking monetary relief for abusive practices only when there has been a lack of good-faith effort to comply with the law.

“I am committed to ensuring we have clear rules of the road and fostering a culture of compliance – a key element in preventing consumer harm,” said CFPB Director Kathleen Kraninger. “We’ve developed a policy that provides a solid framework to prevent consumer harm while promoting the clarity needed to foster consumer beneficial products as well as compliance in the marketplace, now and in the future.”

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  • The explanation seems rather subjective.

    Yet here is the evaluation of the CFPF Director herself as stated above: “’We’ve developed a policy that provides a solid framework….'”

    As to the CFPB as the enforcer of the policy, the policy is a solid framework since the CFPB is the body who makes the subjective decisions.

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