The Consumer Financial Protection Bureau (CFPB) has recently revised its UDAAP Examination Manual. In September 2023, the CFPB decided to revert some changes introduced in the previous year regarding unfair acts or practices in relation to discriminatory conduct.
Originally, in March 2022, the bureau had expanded the definition of ‘unfair acts’ to include discriminatory acts, in cases where federal fair lending laws like the Equal Credit Opportunity Act (ECOA) may not necessarily be applicable. However, this alteration has now been reversed, leading to legal implications for corporate and loaning practices.
While these inclusions initially broadened the scope of actions that could be deemed discriminatory, thus allowing the bureau to monitor and control unethical business practices more effectively, the recent updates seem to restrict this expanded oversight. The reasons for this sudden and unexpected change raise questions among legal professionals.
For a more detailed view of the reshuffle, visit the original news release from Ballard Spahr LLP.
The action from the CFPB comes amidst an appeal from a district court order that vacated these changes. This ongoing legal battle adds another layer of complexity to the rapidly developing situation, with potential ramifications for how unfair and discriminatory practices are identified and dealt with legally, both federally and corporately.
As this shift unfolds, it will be crucial for all legal professionals to be fully equipped and up-to-date with the latest developments in order to effectively protect their clients and organizations from any potential discriminatory claims that may arise as a result.