The CFPB fined Citibank $700 million on July 21, charging the bank with unfair and deceptive acts and practices in its credit card activities prohibited by Dodd-Frank. The following day, the bureau fined Discover Bank $18.5 million for UDAAP violations as a result of the bank’s student loan servicing.

While this might seem like great news for credit unions, it is not. In fact, those responsible for credit union compliance should be very concerned. The problem isn’t UDAAP itself, but instead, the way the CFPB enforces it. Traditionally, regulators interpret new banking laws, then propose and finalize detailed regulations.

UDAAP does not have any implementing regulations and it probably never will. In fact, CFPB Director Richard Cordray said the bureau will not issue any regulations that define exactly what actions or practices violate the law.

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