WASHINGTON – While it's difficult to predict where the CFPB might strike next in taking action based on unfair, deceptive or abusive acts or practices (UDAAP), credit unions can get clues by carefully reading agency consent orders, attorney David Reed said Monday.

“UDAAP is a very powerful tool,” Reed, a partner in the law firm of Reed and Jolly, said during a panel discussion at CUNA's Governmental Affairs Conference.

Reed, who specializes in credit union law, said that the CFPB has become the most powerful regulator by using its wide UDAAP discretion.

He said the agency has used UDAAP to bring enforcement actions against what it believes are abuses in collections and activities that generate fees for financial institutions.

And he warned that the agency may take action against a credit union for abuses committed by a vendor hired by the financial institution.

Joshua Kotin, an attorney with BuckleySander agreed, saying that the agency uses that authority to fill gaps between specific regulations and practices it believes are abusive.

Kotin said credit unions should pay attention to complaints filed by the CFPB.

“If the government's looking at complaints, then you've got to look at complaints,” he said.

The agency has used the vague authority to expand its civil authority, said Brian Knight, senior research fellow for the Financial Markets Working Group at the Mercatus Center at George Mason University.

House Financial Services Chairman Jeb Hensarling and other CFPB critics have said that UDAAP is one area in which the agency has overstepped its statutory authority.

Instant Insights /

CFPB Gives Hints About UDAAP Enforcement: GAC

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