Last time we outlined the Unfair acts or practice definition according to the Dodd-Frank Act. In the conclusion to this article we will add the final two practices under the Dodd-Frank Act.
Deceptive Act or Practice
The Bulletin also describes what conduct would be a deceptive act or practice by a business according to Dodd-Frank. The determining factors are:
1. “The act or practice misleads or is likely to mislead the consumer;
2. The consumer’s interpretation is reasonable under the circumstances; and
3. The misleading act or practice is material.” [footnote omitted].
Just like with the unfair act or practice, the CFBP will look at the totality of the circumstances to determine if the collector mislead the consumer. CFPB Bulletin 2013-07 did note that representations and omission can constitute misleading a consumer.
CFPB Bulletin 2013-07 stated that “[t]o determine if the consumer’s interpretation of the information was reasonable under the circumstances when representations target a specific audience, such as older Americans or financially distressed consumers, the communication may be considered from the perspective of a reasonable member of the target audience.” [footnote omitted]. A further caveat to this is that if a significant minority of a group is deceived by the act or practice, then the act or practice is misleading. If a business makes a representation that could have two meanings and one of the meanings if false, it will be deemed a violation of the Dodd-Frank Act as a deceptive act or practice.
Abusive Acts or Practices
CFPB Bulletin 2013-07 also outlined what would constitute an abusive act or practice by a business under the Dodd-Frank Act. The factors to determine if the conduct is abusive are:
1) Materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or
2)Takes reasonable advantage of –
a) a consumer’s lack of understanding of the material risks, costs, or conditions of the product or service;
b) a consumer’s inability to protect his or her interests in selecting or using a consumer financial product or service; or
c) a consumer’s reasonable reliance on a covered person to act in his or her interests.” [footnote omitted].
CFPB Bulletin 2013-07 states that each of these abusive acts are judged by a separate legal standard.
Do you have Questions regarding how CFPB 2013-07 affects you? Contact your Union New Jersey Business Attorney, The Jayson Law Group LLC.