Statement of Policy Regarding Prohibition on Abusive Acts or Practices; Rescission
| Published date | 19 March 2021 |
| Citation | 86 FR 14808 |
| Record Number | 2021-05437 |
| Section | Rules and Regulations |
| Court | Consumer Financial Protection Bureau |
14808
Federal Register / Vol. 86, No. 52 / Friday, March 19, 2021 / Rules and Regulations
1
Public Law 111–203, tit. X, sec. 1031(a), 124
Stat. 1376, 2005 (2010) (codified at 12 U.S.C.
5531(a)); see also 12 U.S.C. 5536(a)(1)(B) (making it
unlawful for any covered person or service provider
to engage in any abusive act or practice).
2
85 FR 6733 (Feb. 6, 2020).
3
Id. at 6736.
4
Id.
5
Id.
6
Id.
7
Id. at 6735–36.
8
Id. at 6735 n.16 (citing panelists from the
Bureau’s June 2019 Symposium on Abusive Acts or
Practices).
9
See, e.g., Adam J. Levitin, ‘‘Abusive’’ Acts and
Practices: Towards a Definition?, Written
Submission Prepared for CFPB Symposium on
‘‘Abusive’’ at 6–7, 9, https://
files.consumerfinance.gov/f/documents/cfpb_
levitin-written-statement_symposium-abusive.pdf
(arguing that the ‘‘statutory language of the [Dodd-
Frank Act] and the Bureau’s enforcement actions to
date provide a sense of the scope of ‘abusive,’’’ that
‘‘[t]he Bureau would do better to allow the term to
be better defined through the common law
process,’’ and that ‘‘there is no evidence that
uncertainty on the issue is affecting business
practices at all; the claims of certain trade
associations on the matter are completely
unsubstantiated’’); Nicholas F.B. Smyth, presenting
on behalf of Pennsylvania Attorney General Josh
Shapiro, Statement submitted to the Bureau for the
symposium on Abusive Acts or Practices at 1, 5
(June 25, 2019), https://files.consumerfinance.gov/f/
documents/cfpb_smyth-written-statement_
symposium-abusive.pdf (asserting that the
abusiveness standard ‘‘does not stifle innovation
any more than the prohibitions on unfairness or
deception do,’’ and that ‘‘[e]very time Congress
creates a new standard, there is a period of time
when some uncertainty may exist as to what
conduct violates that standard and what does not.
This is perfectly normal, and the Courts are well
equipped to interpret new standards.’’).
Register, the undersigned DOE Federal
Register Liaison Officer has been
authorized to sign and submit the
document in electronic format for
publication, as an official document of
the Department of Energy. This
administrative process in no way alters
the legal effect of this document upon
publication in the Federal Register.
Signed in Washington, DC, on March 15,
2021.
Treena V. Garrett,
Federal Register Liaison Officer, U.S.
Department of Energy.
[FR Doc. 2021–05585 Filed 3–18–21; 8:45 am]
BILLING CODE 6450–01–P
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Chapter X
Statement of Policy Regarding
Prohibition on Abusive Acts or
Practices; Rescission
AGENCY
: Bureau of Consumer Financial
Protection.
ACTION
: Rescission of statement of
policy.
SUMMARY
: The Bureau of Consumer
Financial Protection is rescinding the
Statement of Policy Regarding
Prohibition on Abusive Acts or
Practices.
DATES
: This rescission of the policy
statement published at 85 FR 6733 on
February 6, 2020, is applicable on
March 19, 2021.
FOR FURTHER INFORMATION CONTACT
:
Mehul Madia, Division of Supervision,
Enforcement, and Fair Lending, at (202)
435–7104. If you require this document
in an alternative electronic format,
please contact CFPB_Accessibility@
cfpb.gov.
SUPPLEMENTARY INFORMATION
: Section
1031(a) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act
(Dodd-Frank Act) provides that the
Bureau of Consumer Financial
Protection (Bureau) may use its
authorities, among other things, to
prevent a covered person or service
provider from committing or engaging
in an unfair, deceptive, or abusive act or
practice under Federal law in
connection with any transaction with a
consumer for a consumer financial
product or service, or the offering of a
consumer financial product or service.
1
Section 1031(d) of the Dodd-Frank Act
sets forth standards for when the Bureau
may declare that an act or practice is
abusive for purposes of the Dodd-Frank
Act.
On January 24, 2020, the Bureau
announced a policy statement entitled
‘‘Statement of Policy Regarding
Prohibition on Abusive Acts or
Practices’’ (Policy Statement), which
provided a framework for the Bureau’s
exercise of its supervisory and
enforcement authority to address
abusive acts or practices.
2
Specifically,
the Policy Statement provided that the
Bureau intended to apply the following
three principles during its supervision
and enforcement work. First, the Bureau
stated that it intended to focus on citing
conduct as abusive in supervision or
challenging conduct as abusive in
enforcement if the Bureau concluded
that the harms to consumers from the
conduct outweighed its benefits to
consumers.
3
Second, the Bureau stated
that it would generally avoid
challenging conduct as abusive that
relied on all or nearly all of the same
facts that the Bureau alleged are unfair
or deceptive.
4
The Bureau stated that
where it nevertheless decided to include
an alleged abusiveness violation, the
Bureau intended to plead such claims in
a manner designed to clearly
demonstrate the nexus between the
cited facts and the Bureau’s legal
analysis of the claim. The Bureau stated
that, in its supervision activity, the
Bureau similarly intended to provide
more clarity as to the specific factual
basis for determining that a covered
person had violated the abusiveness
standard.
5
Third, the Bureau stated that
it generally did not intend to seek
certain types of monetary relief for
abusiveness violations where the
covered person was making a good-faith
effort to comply with the abusiveness
standard.
6
The Bureau asserted that the Policy
Statement was necessary to address the
uncertainty of the abusiveness standard
based on the Bureau’s conclusions that
such uncertainty was ‘‘not beneficial,’’
presented ‘‘significant challenges’’ to
businesses, imposed ‘‘substantial costs,
including impeding innovation,’’ and
may cause consumers to ‘‘lose the
benefits of improved products or
services and lower prices.’’
7
As the
Policy Statement referenced, some
panelists at the Bureau’s June 2019
Symposium on Abusive Acts or
Practices urged the Bureau to resolve
the abusiveness standard’s uncertainty
for these and other reasons,
8
while
others expressed the view that the
statutory definition of abusiveness is
sufficiently clear and that no evidence
supported the claims that the
uncertainty had affected business
practices, including chilling
innovation.
9
Based on its review of, and experience
in applying, the Policy Statement,
however, the Bureau has concluded that
the principles set forth in the Policy
Statement do not actually deliver clarity
to regulated entities. In fact, the Policy
Statement’s intended principles,
including ‘‘making a good-faith effort to
comply with the abusiveness standard,’’
themselves afford the Bureau
considerable discretion in its
application and add uncertainty to
market participants. Additionally, the
Bureau’s further consideration of and
experience under the Policy Statement
have led it to conclude that the intended
principles have the effect of hampering
certainty over time. Not asserting
abusiveness claims solely because of
their overlap with unfair or deceptive
conduct or based on the other intended
principles articulated in the Policy
Statement has the effect of slowing the
Bureau’s ability to clarify the statutory
abusiveness standard by articulating
abusiveness claims as well as through
the ensuing issuance of judicial and
administrative decisions. It is thus
counterproductive to the purpose of the
original Policy Statement.
VerDate Sep<11>2014 16:22 Mar 18, 2021 Jkt 253001 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 E:\FR\FM\19MRR1.SGM 19MRR1
jbell on DSKJLSW7X2PROD with RULES
14809
Federal Register / Vol. 86, No. 52 / Friday, March 19, 2021 / Rules and Regulations
10
85 FR at 6735–36.
11
12 U.S.C. 5511(b)(2).
12
12 U.S.C. 5511(a).
13
See, e.g., CFPB v. All Am. Check Cashing, Inc.,
No. 16–cv–356, 2018 WL 9812125, at *3 (S.D. Miss.
Mar. 21, 2018) (rejecting vagueness challenge to the
abusiveness prohibition); CFPB v. ITT Educ. Servs.,
Inc., 219 F. Supp. 3d 878, 906 (S.D. Ind. 2015)
(‘‘Because the CFPA itself elaborates the conditions
under which a business’s conduct may be found
abusive—and because agencies and courts have
successfully applied the term as used in closely
related consumer protection statutes and
regulations—we conclude that the language in
question provides at least the minimal level of
clarity that the due process clause demands of non-
criminal economic regulation.’’); Illinois v. Alta
Colleges, Inc., No. 14–cv–3786, 2014 WL 4377579,
at *4 (N.D. Ill. Sept. 4, 2014) (rejecting vagueness
challenge to abusiveness prohibition).
14
12 U.S.C. 5531(d).
15
5 U.S.C. 553(b).
The Policy Statement also provided
that the Bureau intended to focus on
citing conduct as abusive in supervision
and challenging conduct as abusive in
enforcement if the Bureau concluded
that the harms to consumers from the
conduct outweighed its benefits to
consumers. This principle was intended
to ‘‘ensure[ ] that the Bureau is
committed to using its scarce resources
to address conduct that harms
consumers’’ and to ensure consistency
across supervisory and enforcement
matters.
10
The Bureau has concluded,
however, that there is no basis to treat
application of the abusiveness standard
differently from the normal
considerations that guide the Bureau’s
general use of its enforcement and
supervisory discretion. The Bureau also
did not find this principle helpful in
practice.
Moreover, based on its review of, and
experience in applying, the Policy
Statement, the Bureau has concluded
that the principles set forth in the Policy
Statement have the opposite effect on
preventing harm. One of the Bureau’s
statutory objectives is ‘‘ensuring that,
with respect to consumer financial
products and services . . . consumers
are protected from unfair, deceptive, or
abusive acts and practices and from
discrimination.’’
11
Declining to apply
the full scope of the statutory standard
pursuant to the policy has a negative
effect on the Bureau’s ability to achieve
its statutory objective of protecting
consumers from abusive practices. In
particular, the policy of declining to
seek certain types of monetary relief for
abusive acts or practices—specifically
civil money penalties and
disgorgement—is contrary to the
Bureau’s current priority of achieving
general deterrence through penalties
and other monetary remedies and of
compensating victims for harm caused
by violations of the Federal consumer
financial laws through the Bureau’s
Civil Penalty Fund. Likewise, adhering
to a policy that disfavors citing or
alleging conduct as abusive when that
conduct is also unfair or deceptive is
contrary to the Bureau’s current priority
of maximizing the Bureau’s ability to
successfully resolve its contested
litigation, as it does not allow the
Bureau to assert alternative legal causes
of action in a judicial action or
administrative proceeding. The Bureau’s
statutory purpose includes ‘‘ensuring
. . . that markets for consumer financial
products and services are fair,
transparent, and competitive.’’
12
Declining to cite or penalize conduct as
abusive based on the articulated
principles in the Policy Statement may
also skew the consumer financial
marketplace, to the detriment of market
participants who do not act abusively.
The Bureau will, of course, continue to
engage in typical prosecutorial
discretion as appropriate and can use
that discretion to marshal its resources
effectively.
The Policy Statement was not
required under the abusiveness standard
set forth in the Dodd-Frank Act. The
statutory standard for what the Bureau
has authority to declare an ‘‘abusive act
or practice’’ is set forth in section
1031(d) of the Dodd-Frank Act. The
Policy Statement stated an intent to
refrain from applying the abusiveness
standard even when permitted by law.
Had Congress intended to limit the
Bureau’s authority to apply the full
scope of the abusiveness standard, it
could have prescribed a narrower
abusiveness prohibition, but it did not.
As the Policy Statement itself
acknowledged, courts have consistently
found that section 1031(d) provides
sufficient notice for due process
purposes.
13
Moreover, because the
Policy Statement did not create binding
legal obligations on the Bureau or create
or confer any substantive rights on
external parties, it did not create any
reasonable reliance interests for
industry participants. Thus, rescinding
the Policy Statement is consistent with
the Bureau’s statutory authority.
The Bureau has determined that it
should exercise the full scope of its
supervisory and enforcement authority
to identify and remediate abusive acts or
practices. On reconsideration, the
Bureau has concluded the Policy
Statement’s effectiveness in
accomplishing its stated purposes does
not justify its potential to harm
consumers and the marketplace. For
these reasons, the Bureau is rescinding
the Policy Statement and instead, in its
discretion, intends to exercise its
supervisory and enforcement authority
consistent with the Dodd-Frank Act and
with the full authority afforded by
Congress consistent with the statutory
purpose and objectives of the Bureau.
The statutory standard for what the
Bureau has authority to declare an
‘‘abusive act or practice’’ is set forth in
section 1031(d) of the Dodd-Frank Act.
Specifically, section 1031(d) states that
the Bureau shall have no authority
under this section to declare an act or
practice abusive in connection with the
provision of a consumer financial
product or service, unless the act or
practice—(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
unreasonable advantage of—(A) a lack
of understanding on the part of the
consumer of the material risks, costs, or
conditions of the product or service; (B)
the inability of the consumer to protect
the interests of the consumer in
selecting or using a consumer financial
product or service; or (C) the reasonable
reliance by the consumer on a covered
person to act in the interests of the
consumer.
14
To demonstrate a violation
of section 1031(d), the Bureau therefore
must satisfy the specific elements of
sections 1031(d)(1), 1031(d)(2)(A),
1031(d)(2)(B), or 1031(d)(2)(C). When
the Bureau alleges an abusiveness
violation, the Bureau intends to satisfy
these elements.
Regulatory Requirements: The Policy
Statement constituted a general
statement of policy exempt from the
notice and comment rulemaking
requirements of the Administrative
Procedure Act (APA).
15
It was intended
to provide information regarding the
Bureau’s general plans to exercise its
supervisory and enforcement discretion
and did not impose any legal
requirements on external parties, nor
did it create or confer any substantive
rights on external parties that could be
enforceable in any administrative or
civil proceeding. The rescission of this
policy statement likewise is a general
statement of policy exempt from the
notice and comment rulemaking
requirements of the APA. It is intended
to provide information regarding the
Bureau’s general plans to exercise its
supervision and enforcement discretion
and does not impose any legal
requirements on external parties or
create or confer any substantive rights
on external parties that could be
enforceable in any administrative or
civil proceedings. Because no notice of
proposed rulemaking was originally
required in issuing the Policy
Statement, and is not required in issuing
VerDate Sep<11>2014 16:22 Mar 18, 2021 Jkt 253001 PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 E:\FR\FM\19MRR1.SGM 19MRR1
jbell on DSKJLSW7X2PROD with RULES
14810
Federal Register / Vol. 86, No. 52 / Friday, March 19, 2021 / Rules and Regulations
this rescission, the Regulatory
Flexibility Act also does not require an
initial or final regulatory flexibility
analysis for this rescission. The Bureau
has also determined that the rescission
of the Policy Statement does not impose
any new or revise any existing
recordkeeping, reporting, or disclosure
requirements on covered entities or
members of the public that would be
collections of information requiring
approval by the Office of Management
and Budget under the Paperwork
Reduction Act.
Pursuant to the Congressional Review
Act, 5 U.S.C. 801 et seq., the Bureau will
submit a report containing the
rescission of the Policy Statement and
other required information to the United
States Senate, the United States House
of Representatives, and the Comptroller
General of the United States prior to its
applicability date. The Office of
Information and Regulatory Affairs has
designated the rescission of the Policy
Statement as not a ‘‘major rule’’ as
defined by 5 U.S.C. 804(2).
Dated: March 8, 2021.
David Uejio,
Acting Director, Bureau of Consumer
Financial Protection.
[FR Doc. 2021–05437 Filed 3–18–21; 8:45 am]
BILLING CODE 4810–AM–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 25
[Docket No. FAA–2021–0203; Special
Conditions No. 25–784–SC]
Special Conditions: Lufthansa
Technik, Boeing Model 787–8 Airplane;
Installation of Large, Non-Structural
Glass in the Passenger Cabin
AGENCY
: Federal Aviation
Administration (FAA), DOT.
ACTION
: Final special conditions; request
for comments.
SUMMARY
: These special conditions are
issued for the Boeing Model 787–8
airplane. This airplane as modified by
Lufthansa Technik, will have a novel or
unusual design feature when compared
to the state of technology envisioned in
the airworthiness standards for
transport category airplanes. This design
feature is the installation of large, non-
structural glass in the passenger cabin.
The applicable airworthiness
regulations do not contain adequate or
appropriate safety standards for this
design feature. These special conditions
contain the additional safety standards
that the Administrator considers
necessary to establish a level of safety
equivalent to that established by the
existing airworthiness standards.
DATES
: This action is effective on
Lufthansa Technik on March 19, 2021.
Send comments on or before May 3,
2021.
ADDRESSES
: Send comments identified
by Docket No. FAA–2021–0203 using
any of the following methods:
•Federal eRegulations Portal: Go to
http://www.regulations.gov/ and follow
the online instructions for sending your
comments electronically.
•Mail: Send comments to Docket
Operations, M–30, U.S. Department of
Transportation (DOT), 1200 New Jersey
Avenue SE, Room W12–140, West
Building Ground Floor, Washington, DC
20590–0001.
•Hand Delivery or Courier: Take
comments to Docket Operations in
Room W12–140 of the West Building
Ground Floor at 1200 New Jersey
Avenue SE, Washington, DC, between
9 a.m. and 5 p.m., Monday through
Friday, except Federal holidays.
•Fax: Fax comments to Docket
Operations at 202–493–2251.
Privacy: The FAA will post all
comments it receives, without change,
to http://www.regulations.gov/,
including any personal information the
commenter provides. Using the search
function of the docket website, anyone
can find and read the electronic form of
all comments received into any FAA
docket, including the name of the
individual sending the comment (or
signing the comment for an association,
business, labor union, etc.). DOT’s
complete Privacy Act Statement can be
found in the Federal Register published
on April 11, 2000 (65 FR 19477–19478).
Docket: Background documents or
comments received may be read at
http://www.regulations.gov/ at any time.
Follow the online instructions for
accessing the docket or go to Docket
Operations in Room W12–140 of the
West Building Ground Floor at 1200
New Jersey Avenue SE, Washington,
DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT
:
Shannon Lennon, Human Machine
Interface Section, AIR–626, Transport
Standards Branch, Policy and
Innovation Division, Aircraft
Certification Service, Federal Aviation
Administration, 2200 South 216th
Street, Des Moines, Washington 98198;
telephone and fax 206–231–3209; email
Shannon.Lennon@faa.gov.
SUPPLEMENTARY INFORMATION
: The
substance of these special conditions
has been published in the Federal
Register for public comment in several
prior instances with no substantive
comments received. Therefore, the FAA
has determined that prior public notice
and comment are unnecessary, and
finds that, for the same reason, good
cause exists for adopting these special
conditions upon publication in the
Federal Register.
Comments Invited
The FAA invites interested people to
take part in this rulemaking by sending
written comments, data, or views. The
most helpful comments reference a
specific portion of the special
conditions, explain the reason for any
recommended change, and include
supporting data.
The FAA will consider all comments
received by the closing date for
comments. The FAA may change these
special conditions based on the
comments received.
Background
On September 27, 2019, Lufthansa
Technik applied for a supplemental
type certificate for installation of large,
non-structural glass in the passenger
cabin in the Boeing Model 787–8
airplane. The Boeing Model 787–8 is a
twin-engine, transport category airplane,
with capacity for 381 passengers, and a
maximum takeoff weight of 476,000
pounds.
Type Certification Basis
Under the provisions of title 14, Code
of Federal Regulations (14 CFR) 21.101,
Lufthansa Technik must show that the
Boeing Model 787–8 airplane, as
changed, continues to meet the
applicable provisions of the regulations
listed in Type Certificate No. TC No.
T00021SE or the applicable regulations
in effect on the date of application for
the change, except for earlier
amendments as agreed upon by the
FAA.
If the Administrator finds that the
applicable airworthiness regulations
(e.g., 14 CFR part 25) do not contain
adequate or appropriate safety standards
for the Boeing Model 787–8 airplane
because of a novel or unusual design
feature, special conditions are
prescribed under the provisions of
§ 21.16.
Special conditions are initially
applicable to the model for which they
are issued. Should the applicant apply
for a supplemental type certificate to
modify any other model included on the
same type certificate to incorporate the
same novel or unusual design feature,
these special conditions would also
apply to the other model under § 21.101.
VerDate Sep<11>2014 16:22 Mar 18, 2021 Jkt 253001 PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 E:\FR\FM\19MRR1.SGM 19MRR1
jbell on DSKJLSW7X2PROD with RULES
