Everything old, is new again. In January 2020, the CFPB issued a policy statement on how it was interpreting and enforcing UDAAP. In March 2021 the new acting director of the CFPB announced a reversal of that position. We expect more reversals and more enforcement actions as the CFPB reverts to a position that enforcement actions are a demonstration of consumer protections. Expect a lot of action based on complaints, fair lending, and UDAAP.
The same day the SBA launched its Payment Protect Program for small business loans, the first class action suit was filed against a major bank because of its PPP loan procedures. The suit was filed before the first loan would be funded. When there is any possible error, customers and attorneys are ready to tell you about it.
What must you prepare for? Paraphrased, here is what one circuit court said, “consumers are protected from a company’s deception, even if they never actually read its disclosures.” What you say must be accurate. What you do must be what you said.
Banks must be listening to customers and they must be treated fairly. There is no referring to the fine print. UDAAP has never been a bright line test type of law as there is subjectivity and the bank must understand that in the way it develops and delivers products and services. And this isn’t just on a new product like a PPP loan, but on your existing and sometimes “very mature” products. That is what penalties teach us.
Does your bank understand UDAAP/UDAP and the complaint process? We will look at UDAAP standards, complaint tracking and resolution and enforcement actions, to help you establish a process to avoids criticisms.
BONUS: Webinar participants will receive a Complaint and Inquiries Policy template as part of the course materials.