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UDAAP Training Prezi
Transcript of UDAAP Training Prezi
Whom will it impact?
How should we respond? Abusive Unfair Acts or Practices What does it MEAN? Title X of the Dodd-Frank Act gives the Consumer Financial Protection Bureau the power to take a variety of actions to prevent any entity underneath its regulatory umbrella from committing or engaging in an unfair, deceptive, or abusive act or practice (“UDAAP”) Definition: Dodd and Frank Purpose: To prevent unfair, deceptive, or abusive acts and practices that can cause significant financial injury to consumers, erode consumer confidence, and undermine the financial marketplace. An act or practice is unfair when:
It causes or is likely to cause substantial injury to consumers
The injury is not reasonably avoidable by consumers; AND
The injury is not outweighed by benefits to consumers or to competition. An act or practice is deceptive when:
It misleads or is likely to mislead consumers;
The consumer’s interpretation of the representation, omission, act or practice is reasonable under the circumstances AND
The misleading representation, omission, act or practice is material. An act or practice is abusive when it:
Materially interferes with the consumer's ability to understand a financial product or service; or
Takes unreasonable advantage of:
Lack of consumer understanding
Inability of consumer to protect their interests
Reasonable reliance by consumer on a covered person to act in their interest UDAAP Anne Considine-Olsen April, 2012 Impact on the Industry Powers of the CFPB What are penalties for violations? UDAAP violations can draw a penalty of up to $5,000 per day.
Reckless violations can cost $25,000 per day, and knowing violations will cost up to $1 million per day. Consumer Financial Protection Bureau has rule-making authority and enforcement authority in
connection with any
transaction with a consumer
for a financial product or service How to Respond Address key issues: Analyze complaints promptly, and facilitate informed choices by customers.
Bring compliance and legal functions into the process of new product development
Incentivize compliance and the ethical conduct of everyone in the organization UDAAP = Unfair, Deceptive, or Abusive Acts or Practices
CFPB has powers for rulemaking and enforcement, and penalties are stiff
We will respond by addressing key issues before they become problems The Take Away In Summary: An Introduction to Title X of the Dodd-Frank Act