American University Washington College of Law Symposium

Speaking Engagement | June.29.2022

American University | Washington, D.C.

CFPB’s New Approach to Discrimination: Invoking UDAAP
Wednesday, June 29, 2022 - 12:00 PM EDT

The Consumer Financial Protection Bureau earlier this year claimed a new tool to prevent discrimination in financial services by examining institutions for conduct that, while potentially falling outside the ambit of traditional fair lending laws, was nonetheless "unfair." To the uninitiated, the change seemed semantic. To providers and consumers of financial services and products, it is potentially seismic.

Orrick partners Jeremiah Buckley and John Coleman joined a distinguished panel for a symposium that steered the conversation about this controversial and untested approach to a shared understanding of the bureau's expectations, and how institutions can meet them.

Click here to view the recording.

Symposium conversation

Eric Halperin, Assistant Director for the Office of Enforcement, Consumer Financial Protection Bureau, interviewed by V. Gerard Comizio, Associate Director, Business Law Program at the American University Washington College of Law

Symposium presenters

Program description

Defining conduct as unfair, deceptive, or abusive triggers liability under the Consumer Financial Protection Act, a broad statute that could reach well beyond the traditional lending realm covered by the Equal Credit Opportunity Act. In fact, the CFPB paired its announcement with revised examination procedures for assessing UDAAP compliance and a separate blog post by its enforcement and supervision heads explaining that they were "cracking down on discrimination in the financial sector." They said the new procedures would guide examiners to look "beyond discrimination directly connected to fair lending laws" and "to review any policies or practices that exclude individuals from products and services, or offer products or services with different terms, in an unfairly discriminatory manner."

The bureau's full-court press on this new initiative left some meaningful questions unanswered. This symposium will explore the legal and policy questions raised by the CFPB's adoption of a theory of "unfair discrimination." The symposium will begin with a conversation between CFPB Enforcement Director Eric Halperin and Professor Comizio about the CFPB's theory of unfairness and the implications of the changes to the examination manual for regulated institutions.

This program covers how the CFPB's UDAAP authority interacts with laws enacted specifically to prevent discriminatory conduct, the legal support for the CFPB's new theory, and the specific steps institutions should consider taking to ensure compliance with it. Indications that the Federal Trade Commission could adopt a similar theory of "unfair discrimination" make this a timely and relevant discussion for companies within and without the financial services industry.