UDAAPs Flashcards
Dodd-Frank denies an Unfair Act or Practice as:
Something that causes or is likely to cause substantial injury to consumers.
The injury is not reasonably avoidable by consumers.
The injury is not outweighed by countervailing benefits to the consumers or to competition.
A Substantial Injury:
Typically takes the form of monetary harm, like fees or costs paid by the consumers because of the unfair act or practice. In the case of Dodd-Frank, substantial injury doesn’t just have to be monetary damage, it can also take other forms and if a significant risk of concrete harm is present then that can be considered substantial injury. In other words, it is the intent of the harm that may cause the injury is there or the potential for substantial injury exists that is still considered substantial harm and an act that is unfair.
What are some examples for Unfair and Deceptive Acts or Practices?
Refusing to release lien after the consumer makes the final payment on the mortgage.
Dishonoring credit card conscience checks without notice.
Processing payments for companies engaged in fraudulent activities.
Dodd-Frank also prohibits the conduct that constitutes A Deceptive Act Or Practice. An act of practice is considered deceptive when:
The act or practice misleads or is likely to mislead the consumer.
The consumer’s interpretation is reasonable under the circumstances.
The misleading act or practice is material.
What are some examples provided by the CFPB that are considered deceptive acts or practices?
Inadequate disclosure of material lease terms in television advertising.
Misrepresentation about loan terms.
Dodd-Frank further prohibits conduct that constitutes An Abusive Act Or Practice. An act or practice is abusive when:
The act materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service.
An act or practice is abusive when:
The act takes unreasonable advantage of:
A consumer’s lack of understanding of the material risks, costs, or conditions of the product or service.
A consumer’s inability to protect his or her interests in selecting or using a consumer financial product or services.
A consumer’s reasonable reliance on a covered person to act in his or her interest.
