Attorney General Bonta Endorses CFPB Policy Statement on Abusive Conduct in Consumer Financial Markets

OAKLAND – California Attorney General Rob Bonta today announced that he joined a multistate coalition in submitting a comment letter to the Consumer Financial Protection Bureau (CFPB), wholly endorsing its recently issued policy statement on abusive conduct in consumer financial markets. Signed into law by President Barack Obama following the 2008 financial crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits “any unfair, deceptive, or abusive act or practice[.]” On April 3, 2023, the CFPB issued a policy statement to provide guidance on the elements of abusive acts or practices that violate the Dodd-Frank Act, and explain how government enforcers, like attorneys general, can identify such unlawful conduct. The CFPB also announced it was seeking public comment on its policy statement, adding that it may revise the policy statement as appropriate. The letter by the attorneys general responds to that request for public comment. Policy statements are meant to serve as a road map and to provide guidance on a particular issue. 

“In the nearly 13 years that the Dodd-Frank Act has been in place, the CFPB has made a tremendous difference for American consumers. The policy statement it has issued on abusive conduct is a continuation of that critical purpose,” said Attorney General Bonta. “From banks to payday lenders, abusive conduct has no place in our consumer financial markets, and the policy statement provides helpful guidance for attorneys general on how we can better tackle it. I look forward to continuing the strong state-federal partnership we have with the CFPB.” 

In their letter, the attorneys general commend the CFPB for:

• Providing a clear analytical framework for what constitutes abusive acts or practices. The policy statement describes that abusive acts or practices under the Consumer Financial Protection Act (CFPA), which is part of the Dodd-Frank Act, generally fall into two categories: (1) obscuring important features of a product or service, or (2) leveraging certain circumstances to take an unreasonable advantage.
• Using its existing enforcement actions as examples of illegal abusive conduct. The policy statement, for instance, references Wells Fargo’s now-infamous acts of opening unauthorized deposit accounts as having taken an unreasonable advantage of consumers.
• Emphasizing flexibility and guidance — as opposed to definitions and limitations — throughout its policy statement, given that attorneys general play a key role in enforcement of the state and federal consumer protection laws, including the CFPA.
• Accounting for the realities of modern consumer markets, including by clarifying that both acts and omissions can materially interfere with the ability of a consumer to understand terms and conditions. For example, companies often use fine print or complex language to limit an individual’s understanding of a term or condition. 

In submitting the comment letter, Attorney General Bonta joins the attorneys general of Arizona, Colorado, Connecticut, the District of Columbia, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, and Wisconsin.

A copy of the comment letter can be found here.