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The Meaning of "Abusive" in the UDAAP Triad

posted by Adam Levitin

On June 25, the CFPB will be holding a symposium on the meaning of "abusive" in the Consumer Financial Protection Act.  "Abusive" is an expansion of the traditional FTC Act couplet of "unfair or deceptive" acts and practices (UDAP) to a triad of "unfair, deceptive, or abusive" acts and practices (UDAAP). Although the Bureau has operated for the past eight years without defining the term "abusive", it has indicated in its long-term rulemaking agenda that it intends to undertake a rulemaking to define "abusive"—presumably in response to US Chamber of Commerce complaints about legal uncertainty chilling business.

The symposium will have two panels, one of academics, one of practitioners.  Credit Slips will be well represented on the first panel by me and our former guest blogger, Patricia McCoy.  We'll be joined by Howard Beales of GW University's Business School, and the inimitable Todd Zywicki of Scalia Law School.    

My (lengthy) written submission (a/k/a everything you wanted to know about "abusive" but were afraid to ask) is here.  Bottom line, there's no reason for the Bureau to undertake a definitional rulemaking, its legal authority to do so is suspect, it cannot bind state AG's to any definition... but if it does do so, there's no scienter requirement, no cost-benefit analysis required, and "taking unreasonable advantage" sounds in unjust enrichment.   

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