118 HR 6789 IH: Rectifying Undefined Descriptions of Abusive Acts and Practices Act
U.S. House of Representatives
2023-12-14
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I
118th CONGRESS
1st Session
H. R. 6789
IN THE HOUSE OF REPRESENTATIVES
December 14, 2023
Mr. Barr (for himself, Mr. Luetkemeyer, Mr. Posey, Mr. Meuser, Mr. Steil, Mr. Sessions, Ms. De La Cruz, Mr. Fitzgerald, Mr. Timmons, Mr. Rose, Mr. Mooney, Mr. Loudermilk, Mr. Norman, Mrs. Kim of California, and Mr. Williams of Texas) introduced the following bill; which was referred to the Committee on Financial Services
A BILL
To amend the Consumer Financial Protection Act of 2010 to clarify standards for UDAAP enforcement actions brought by the Bureau of Consumer Financial Protection, and for other purposes.
1.

Short title
This Act may be cited as the “Rectifying Undefined Descriptions of Abusive Acts and Practices Act” or the “Rectifying UDAAP Act”.
2.

Mitigating factors in assessing civil penalties
Section 1055(c) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5565(c)) is amended by adding at the end the following:
“(6)

Rulemaking
The Bureau shall, not later than 180 days after the date of the enactment of this paragraph, issue a rule that establishes policies and procedures relating to the imposition of civil monetary penalties sought under this subsection, including the application of the mitigating factors described in paragraph (3).”.
3.

Rulemaking relating to unfair, deceptive or abusive acts or practices
(a)

In general
Section 1031(b) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5531) is amended by striking subsection (b) and inserting the following:
(b)

Rulemaking
“(1)

In general
The Bureau may prescribe rules applicable to a covered person or service provider identifying as unlawful unfair, deceptive, or abusive acts or practices in connection with any transaction with a consumer for a consumer finanical product or service, or the offering of a consumer financial product or service. Rules under this section may include requirements for the purpose of preventing such acts or practices.
(2)

Cost benefit analysis required
Any final rule issued by the Bureau relating to abusive, unfair, or deceptive acts or practices shall include a cost-benefit analysis.
(3)

Definition of abusive act or practice
The Bureau shall, not later than 180 days after the date of the enactment of this subsection, issue a rule that defines the term “abusive act or practice” for the purposes of this section.” .
(b)

Opportunity for comment
The Bureau of Consumer Financial Protection shall, not later than 180 days after the date of the enactment of this subsection, allow the public to submit comments with respect to any confusion about how the Bureau of Consumer Financial Protection uses its authority with respect to unfair, deceptive, or abusive acts or practices.
4.

Authority to declare an act unlawful based on discrimination
The Bureau of Consumer Financial Protection may not interpret the authority of the Bureau of Consumer Financial Protection relating to unfair, deceptive, or abusive acts and practices, as such term is used in section 1031 of the Consumer Financial Protection Act of 2010, to include discriminatory practices.
5.

Clarifying the abusive standard for the Bureau of Consumer Financial Protection
Section 1031 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5531) is amended by striking subsection (d) and inserting the following:
“(d)

Abusive
(1)

In general
The Bureau shall have no authority to declare an act or practice of a covered person abusive in connection with the provision of a consumer financial product or service, unless the act or practice—
(A)
intentionally and materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or
(B)
takes unreasonable advantage of—
(i)
a lack of understanding by the consumer with respect to the possible impact, material risks, costs, or conditions of the product or service, or the likelihood of the risks, costs, or conditions of the product or service negatively affecting the consumer; and
(ii)
the reasonable reliance the consumer places on an affirmative action or representation of such covered person to induce such consumer to rely on such action or representation.
(2)

Abusive actions
Conduct of a covered person shall be considered abusive if—
(A)
the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers;
(B)
such substantial injury is not outweighed by countervailing benefits to consumers or to competition; or
(C)
the conduct is otherwise prohibited by Federal consumer financial law.
(e)

Good-Faith effort To comply
(1)

In general
The Bureau may not seek monetary relief from a covered person under this section unless the covered person has not established by a preponderance of the evidence that they made a good-faith effort to comply.
(2)

Authority to seek legal or equitable remedies
The limitation described in subparagraph (A) shall not restrict the authority of the Bureau to seek legal or equitable remedies, such as damages and restitution, to redress an identifiable consumer injury caused by the abusive acts or practices of such covered person.”.
6.

Notice and opportunity to cure
Section 1031 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5531) is amended by adding at the end the following:
“(g)

Notice and opportunity To cure
(1)

In general
If a covered person self-identifies a potential unfair, deceptive, or abusive act or practice carried out by such covered person, the Bureau shall, not later than 90 days after such self-identification, provide a written notice in the form of a potential action and request for response letter or a notice and opportunity to respond and advise letter of the potential unfair, deceptive, or abusive act or practice to such covered person and inform the covered person that such person has 180 days after the date the covered person receives such notice to cure such potential unfair, deceptive, or abusive act before the Bureau may pursue other legal action.
(2)

Tolling of statute of limitations
Any applicable statute of limitations that applies to conduct under which the Bureau has given notice and an opportunity to cure shall not toll until—
(A)
the covered person cures the potential abusive, unfair, or deceptive act or practice and notifies the Bureau that such act or practice has been cured;
(B)
the covered person notifies the Bureau that such covered person will not cure the act or practice; or
(C)
the 180-day period to cure ends.”.
7.

Abusive, unfair, or deceptive acts or practices enforcement actions
(a)

In general
Subtitle E of title X of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5561 et seq.) is amended by adding at the end the following new section:
“1059.

Unfair, Deceptive, or Abusive Acts or Practices Enforcement Actions
Enforcement actions brought by the Bureau under section 1031 under this title shall be brought in—
(1)
the United States district court located where the covered person has its headquarters location; or
(2)
the United States District Court for the District of Columbia.”.
(b)

Actions under section 1031
Section 1031 of the Consumer Financial Protection Act of 2010 is amended by adding at the end the following:
“(g)

Enforcement Actions
(1)

In general
If the Bureau brings an enforcement action under this section, the Bureau shall state with particularity the circumstances that the Bureau alleges constitute violation of this section.
(2)

Alternative Claims
If the Bureau brings an enforcement action under this section—
(A)
claiming that an activity is unfair or deceptive, the Bureau may not claim in the alternative that the activity is abusive; and
(B)
claiming that an activity is abusive, the Bureau may not claim in the alternative that the activity is unfair or deceptive.” .
8.

Look-back provisions for the Consumer Financial Protection Bureau
Subtitle B of title X of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5511 et seq.) is amended by adding at the end the following new section:
“1029B

Examination period limitations
(a)

In general
When enforcing Federal consumer financial laws, the Bureau may not seek a civil money penalty for any violating conduct that occurred prior to the most recent assignment of a consumer compliance rating.
(b)

Rule of construction
This limitation described in subsection (a) may not be construed to restrict the ability of the Bureau to seek other forms of legal or equitable relief available under subparagraphs (A) through (G) of section 1055(a)(2) for any violating conduct that occurred prior to the most recent assignment of a consumer compliance rating.”.