The Consumer Financial Protection Bureau’s Feb. 28 bulletin on auto repossessions serves as a laundry list of unfair, deceptive or abusive acts or practices (UDAAP) that the Bureau has on its radar and should be used as a resource for compliance teams, Hudson Cook partner Robert Gage said during a compliance session at the Auto Finance Risk Summit.
The bulletin warns lenders that the Bureau is closely monitoring actions such as the illegal seizure of cars, sloppy record keeping, unreliable balance statements and requiring a “ransom” for personal property, according to the CFPB.
UDAAP as a concept has been around for a very long time, Gage said, but is difficult to work with sometimes because what constitutes “unfair” or “deceptive” is relative. “There are standards that are some definitions or guidance on that, but it’s relatively high level, [the Bureau does not] typically get into a lot of detail.”
Lenders typically only discover that a particular action is a UDAAP violation during an examination by the CFPB or if they are “on the wrong end of an enforcement action,” Gage said.
With the new bulletin, however, the CFPB describes UDAAPs as current law, he said. “These are all the things that the Bureau has seen before in a supervisory exam or in an enforcement action and has consolidated all of this into one nice little place for us [to] be aware of,” Gage said.
“Now … I can talk to my compliance people and say, ‘Look, it’s right there. You shouldn’t be doing that.”