Dealing with the CFPB can be painful.
For the better part of two years, we have been working with consumer finance companies to prepare for the CFPB. Most of our efforts with clients have been focused on designing and implementing. A few weeks ago, we shared several observations from our experience.
But drafting a good compliance program is only part of the equation. Just as important, companies have to sufficiently train employees. A compliance program is only as good as the company’s training.
Training needs to be specific and narrowly tailored to the particular company. We advise our clients that the best way to handle training is through cumulative efforts, meaning the more training actions and resources a company offers, the better.
Earlier this year, my law partner and I developed a series of presentations covering different laws that fall under the CFPB’s umbrella. We designed the presentations to be geared toward employees, with the goal being to provide an additional training resource that companies can use to supplement other training steps.
Last week’s presentation covered (both in-person and simultaneously broadcasted online) Unfair, Deceptive, or Abusive Acts or Practices (UDAAP), which we have previously discussed here and here. The presentation included three parts—a summary of the law, real-world examples applicable to consumer finance companies and a question-and-answer session.
When I lecture on federal law compliance, I sometimes see the “deer in headlights” look that the intricacies of federal regulation can evoke. I have come to terms with the fact that most do not find federal consumer financial laws as riveting as I do. However, last week, this was certainly not the case. The response from those attending in person and online was different. It was almost as if they were watching a painfully uncomfortable movie. To sum up the reaction in one word—dismay.
Just a few minutes in, I gathered that my audience did not care much for UDAAP. The frowns and scowls started when we discussed the difference between technical-based laws (e.g., FCRA, TILA, GLBA) that establish clear rules and a principle-based law like UDAAP that provides companies cannot act in a certain way. One of the final slides in my presentation included a quote from the CFPB Supervision and Examination Manual: “[A] transaction that is in technical compliance with other federal or state laws may nevertheless violate the prohibition against UDAAPs.” At that point, I expected rotten tomatoes to be hurled at the slide.
We ended with a question-and-answer session. One person commandeered the microphone to give a testimonial about how UDAAP is threatening his livelihood. Most others basically asked the same question in different forms—“Is the CFPB going to use UDAAP to shut down the consumer finance industry?”
The lesson I learned is that consumer finance companies really hate UDAAP. On the bright side, I have never had an audience so engaged in a federal law compliance topic.