H.R.1652 - Rectifying Undefined Descriptions of Abusive Acts and Practices Act; Rectifying UDAAP Act (119th Congress)
Summary
H.R. 1652, the Rectifying Undefined Descriptions of Abusive Acts and Practices Act, aims to amend the Consumer Financial Protection Act of 2010 (CFPA). The bill seeks to clarify the standards for Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) enforcement actions brought by the Bureau of Consumer Financial Protection (BCFP). It introduces requirements for rulemaking, cost-benefit analysis, and definitions related to UDAAP.
Specifically, the bill requires the BCFP to issue rules defining 'abusive act or practice' and establishing policies for civil monetary penalties. It also limits the BCFP's authority to declare an act unlawful based on discrimination and clarifies the abusive standard, focusing on intentional interference with consumer understanding or unreasonable advantage-taking.
Furthermore, H.R. 1652 introduces a notice and opportunity to cure process for covered persons who self-identify potential UDAAP violations. It also specifies the venues for UDAAP enforcement actions and sets limitations on look-back provisions for the BCFP.
Expected Effects
If enacted, H.R. 1652 would narrow the scope of the BCFP's UDAAP enforcement authority. This could lead to fewer enforcement actions against financial institutions.
It would also provide more clarity and procedural safeguards for businesses, potentially reducing compliance costs. Consumers might experience changes in the level of protection they receive from the BCFP.
Potential Benefits
- Increased clarity for businesses regarding UDAAP compliance, reducing uncertainty and potential for frivolous lawsuits.
- A cost-benefit analysis requirement for BCFP rules, ensuring regulations are economically justified.
- A notice and opportunity to cure process, allowing businesses to correct potential violations before facing legal action.
- Limits on the BCFP's enforcement authority, preventing overreach and protecting businesses from unfair penalties.
- Specification of venues for UDAAP enforcement actions, providing businesses with more predictable legal proceedings.
Potential Disadvantages
- Reduced consumer protection due to the narrowed scope of UDAAP enforcement.
- Potential for financial institutions to engage in practices that, while technically compliant, may still harm consumers.
- Delays in addressing harmful practices as the BCFP is required to undergo additional rulemaking and analysis.
- Increased difficulty for the BCFP to pursue enforcement actions against discriminatory practices.
- Less flexibility for the BCFP to adapt to new and evolving forms of consumer abuse.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's alignment with the US Constitution is complex. Congress has the power to regulate commerce (Article I, Section 8), which includes consumer financial products and services. The bill does not appear to infringe on individual rights outlined in the Bill of Rights.
However, some may argue that limiting the BCFP's authority could impact the government's ability to ensure justice and promote the general welfare, as stated in the Preamble. The bill's focus on due process and clarity for businesses could be seen as upholding the Fifth Amendment's guarantee of due process.
Overall, the bill's constitutionality depends on how one interprets the balance between government regulation and individual liberty within the framework of the Constitution.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).