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Federal Register / Vol. 86, No. 52 / Friday, March 19, 2021 / Rules and Regulations The Policy Statement also provided that the Bureau intended to focus on citing conduct as abusive in supervision and challenging conduct as abusive in enforcement if the Bureau concluded that the harms to consumers from the conduct outweighed its benefits to consumers. This principle was intended to ensure that the Bureau is committed to using its scarce resources to address conduct that harms consumers and to ensure consistency across supervisory and enforcement matters.10 The Bureau has concluded, however, that there is no basis to treat application of the abusiveness standard differently from the normal considerations that guide the Bureaus general use of its enforcement and supervisory discretion. The Bureau also did not find this principle helpful in practice.
Moreover, based on its review of, and experience in applying, the Policy Statement, the Bureau has concluded that the principles set forth in the Policy Statement have the opposite effect on preventing harm. One of the Bureaus statutory objectives is ensuring that, with respect to consumer financial products and services . . . consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination. 11 Declining to apply the full scope of the statutory standard pursuant to the policy has a negative effect on the Bureaus ability to achieve its statutory objective of protecting consumers from abusive practices. In particular, the policy of declining to seek certain types of monetary relief for abusive acts or practicesspecifically civil money penalties and disgorgementis contrary to the Bureaus current priority of achieving general deterrence through penalties and other monetary remedies and of compensating victims for harm caused by violations of the Federal consumer financial laws through the Bureaus Civil Penalty Fund. Likewise, adhering to a policy that disfavors citing or alleging conduct as abusive when that conduct is also unfair or deceptive is contrary to the Bureaus current priority of maximizing the Bureaus ability to successfully resolve its contested litigation, as it does not allow the Bureau to assert alternative legal causes of action in a judicial action or administrative proceeding. The Bureaus statutory purpose includes ensuring . . . that markets for consumer financial products and services are fair, transparent, and competitive. 12
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FR at 673536.
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Declining to cite or penalize conduct as abusive based on the articulated principles in the Policy Statement may also skew the consumer financial marketplace, to the detriment of market participants who do not act abusively.
The Bureau will, of course, continue to engage in typical prosecutorial discretion as appropriate and can use that discretion to marshal its resources effectively.
The Policy Statement was not required under the abusiveness standard set forth in the Dodd-Frank Act. The statutory standard for what the Bureau has authority to declare an abusive act or practice is set forth in section 1031d of the Dodd-Frank Act. The Policy Statement stated an intent to refrain from applying the abusiveness standard even when permitted by law.
Had Congress intended to limit the Bureaus authority to apply the full scope of the abusiveness standard, it could have prescribed a narrower abusiveness prohibition, but it did not.
As the Policy Statement itself acknowledged, courts have consistently found that section 1031d provides sufficient notice for due process purposes.13 Moreover, because the Policy Statement did not create binding legal obligations on the Bureau or create or confer any substantive rights on external parties, it did not create any reasonable reliance interests for industry participants. Thus, rescinding the Policy Statement is consistent with the Bureaus statutory authority.
The Bureau has determined that it should exercise the full scope of its supervisory and enforcement authority to identify and remediate abusive acts or practices. On reconsideration, the Bureau has concluded the Policy Statements effectiveness in accomplishing its stated purposes does not justify its potential to harm consumers and the marketplace. For these reasons, the Bureau is rescinding the Policy Statement and instead, in its discretion, intends to exercise its supervisory and enforcement authority consistent with the Dodd-Frank Act and 13 See, e.g., CFPB v. All Am. Check Cashing, Inc., No. 16cv356, 2018 WL 9812125, at 3 S.D. Miss.
Mar. 21, 2018 rejecting vagueness challenge to the abusiveness prohibition; CFPB v. ITT Educ. Servs., Inc., 219 F. Supp. 3d 878, 906 S.D. Ind. 2015
Because the CFPA itself elaborates the conditions under which a businesss conduct may be found abusiveand because agencies and courts have successfully applied the term as used in closely related consumer protection statutes and regulationswe conclude that the language in question provides at least the minimal level of clarity that the due process clause demands of noncriminal economic regulation.; Illinois v. Alta Colleges, Inc., No. 14cv3786, 2014 WL 4377579, at 4 N.D. Ill. Sept. 4, 2014 rejecting vagueness challenge to abusiveness prohibition.

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with the full authority afforded by Congress consistent with the statutory purpose and objectives of the Bureau.
The statutory standard for what the Bureau has authority to declare an abusive act or practice is set forth in section 1031d of the Dodd-Frank Act.
Specifically, section 1031d states that the Bureau shall have no authority under this section to declare an act or practice abusive in connection with the provision of a consumer financial product or service, unless the act or practice1 materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or 2 takes unreasonable advantage ofA a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service; B
the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service; or C the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.14 To demonstrate a violation of section 1031d, the Bureau therefore must satisfy the specific elements of sections 1031d1, 1031d2A, 1031d2B, or 1031d2C. When the Bureau alleges an abusiveness violation, the Bureau intends to satisfy these elements.
Regulatory Requirements: The Policy Statement constituted a general statement of policy exempt from the notice and comment rulemaking requirements of the Administrative Procedure Act APA.15 It was intended to provide information regarding the Bureaus general plans to exercise its supervisory and enforcement discretion and did not impose any legal requirements on external parties, nor did it create or confer any substantive rights on external parties that could be enforceable in any administrative or civil proceeding. The rescission of this policy statement likewise is a general statement of policy exempt from the notice and comment rulemaking requirements of the APA. It is intended to provide information regarding the Bureaus general plans to exercise its supervision and enforcement discretion and does not impose any legal requirements on external parties or create or confer any substantive rights on external parties that could be enforceable in any administrative or civil proceedings. Because no notice of proposed rulemaking was originally required in issuing the Policy Statement, and is not required in issuing 14 12
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U.S.C. 5531d.
U.S.C. 553b.

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