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Written By ESR News Blog Editor Thomas Ahearn

On March 11, 2021, the Consumer Financial Protection Bureau (CFPB) – a government agency that empowers consumers to take more control over their economic lives – announced it was rescinding its January 24, 2020, “Statement of Policy Regarding Prohibition on Abusive Acts or Practices” to better protect consumers.

The CFPB intends to exercise its supervisory and enforcement authority consistent with the full scope of its statutory authority under the Dodd-Frank Act as established by Congress, which defined abusive acts or practices in section 1031(d) of the Act. Paraphrasing Congress, that standard prohibits companies from:

  • Materially interfering with someone’s ability to understand a product or service,
  • Taking unreasonable advantage of someone’s lack of understanding,
  • Taking unreasonable advantage of someone who cannot protect themself, and
  • Taking unreasonable advantage of someone who reasonably relies on a company to act in their interests.

The 2020 Policy Statement was inconsistent with the CFPB’s duty to enforce the standard and rescinding it will better serve to protect consumers from abusive practices. For example, the 2020 Policy Statement stated that the CFPB would decline to seek civil money penalties and disgorgement for certain abusive acts or practices.

The CFPB deters abusive practices and compensates harmed consumers using penalties, so the 2020 Policy Statement undermined deterrence and was contrary to the CFPB’s mission of protecting consumers. The CFPB intends to consider good faith, company size, and other factors as it uses its prosecutorial discretion.

The CFPB – which enforces the federal Fair Credit Reporting Act (FCRA) that regulates background checks for employment purposes in the United States – helps consumer finance markets work by making rules more effective and consistently enforcing those rules. To learn more about the CFPB, visit www.consumerfinance.gov.

Employment Screening Resources® (ESR) – a leading global background check provider that was named the number one screening firm by HRO Today – offers comprehensive background screening services that empower our clients to make compliant and informed hiring decisions. To learn more about ESR, visit www.esrcheck.com.

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