Compliance Issues Panel

UDAAP

The Dodd-Frank Act enhanced the CFPB’s abilityto prohibit “unfair, deceptive, and abusive”practices or acts (“UDAAP”) that occur inconnection with consumer financial products orservices.

Enforcement Power

• Section 1031 of Dodd Frank:

The Bureau may take enforcement action to preventa provider from committing an unfair, deceptive orabusive act under federal law in connection withany transaction with a consumer for a consumerfinancial product or service or the offering of aconsumer financial product or service.

UDAAP: Key Definitions

• Unfair

• Deceptive – misleading consumers

• Abusive – interferes with a consumer’sunderstanding or takes unreasonableadvantage of the consumer

Practices Subject to UDAAP

• Marketing Activities

• Debt Collection and Debt Settlement

• Mortgage Loan Servicing and ForeclosurePractices

Actions to Protect Your Institution

• Test your marketing and advertising materials

• Review your website

• Properly train your employees

• Incentivize compliance with UDAAP

• Regularly review consumer products and services

Actions to Protect Your Institution

• Pay attention to consumer complaints

• Review the Bank’s policies and procedures

• Evaluate new consumer products

• Review third party service provider agreements

• Evaluate how products are communicated toconsumers

Equal Credit Opportunity Act

ECOA prohibits discrimination on the basis of race, color, religion, national origin, sex or

marital status, or age against any applicant in any aspect of a credit transaction

Key Terms

• Applicant: any person who applies for credit

• Credit Transaction

– Commercial and consumer

– New credit, renewals, modifications

• Creditor: a person who regularly participates in a credit decision

– Includes a creditor's assignee, transferee, or subrogee

Discrimination in Credit Transactions

• ECOA prohibits unequal treatment throughout entire credit relationship

• Intent is not an element of a violation

• Discouraging applications

• Discrimination based on persons associated with applicant

Equal Treatment in Lending

• Must Communicate Adverse Action onApplication within 30 days of decision– Rules for Businesses

– Inquiries v. Applications

– Incomplete Applications

– Adverse Action: a refusal to grant credit insubstantially the amount or on substantially the termsrequested in an application

– Statement of Specific Reasons for Adverse Action

– Record Retention Requirements

Adverse Action under the FCRA

• Regulates use of credit information

• Only applies to credit information on consumers

• Specific notice requirements if adverse action based on consumer report

Spousal Signatures

• Equal treatment for married and unmarriedapplicants

• Cannot automatically require spousalsignatures

– Joint PFS ≠ Joint Application

• Cannot mandate cosigner be spouse

• Renewals and reevaluating creditworthiness

Consumer Financial Protection Bureau

• Baseline and Targeted Reviews of Creditors

• Recommended Compliance Management System:

– A Fair Lending Policy

– Fair Lending Training for Employees

– Compliance Monitoring

– Evaluation of Fair Lending Policies and Procedures

– Regular Analysis of Loan Data

– Regular Assessment of Marketing of Loan Products

– Meaningful Oversight of Management System

• Resources for Compliance

– ConsumerFinance.gov

– Appendices to Regulations

Debt Collection Practices

• Fair Debt Collection Practices Act

• Florida Consumer Collection Practices Act

• Best Practices

Fair Debt Collection Practice Act (“FDCPA”)

• Purpose

• Definitions– Debt

– Consumer

– Debt Collector

– Does not include “creditors” unless…

Why does this matter to me?

• Banks may be Debt Collectors

• Activities that involve debt collection

• Consumer Financial Protection Bureau

Consumers and their attorneys are plotting against you right now…

FDCPA:Required and Permitted Practices

• Communications

– Manner

– Request to Cease

– Issues with 3rd Parties

• Requirements

– Debt validation process

FDCPA: Prohibited Practices

• Harassment or Abuse

• False or Misleading Representations

• Unfair Practices

• Furnishing Deceptive Forms

• Least Sophisticated Consumer Standard

FDCPA: Enforcement & Liability

• One year statute of limitations

• Liability for each violation

• Damages

– Actual damages

– Statutory damages of $1,000 per violation

– Costs and attorneys’ fees

• Factors to limit liability

Florida Consumer Collection Practices Act (“FCCPA”)

• Purpose

• Relationship to FDCPA

– Increases protections afforded by the FDCPA to consumers

– FDCPA interpretations are instructive

– Liability is cumulative

FCCPA: Differences from FDCPA

• Applicability/Definitions

–Debt Collector – ANY PERSON

–Consumer Collection Agencies

• Registration Requirements

FCCPA: Enforcement & Liability

Statute of Limitations is 2 years Florida Division of Consumer Services of the Department

of Financial Services Consumer complaints Up to $1,000 fine

• Damages– Actual damages– Statutory damages of $1,000 per violation– Costs and attorneys’ fees– Punitive damages– Injunctive Relief

Best Practices

• Create detailed procedures manuals

• Automate critical tasks

• Ongoing training

• Audit compliance and document remedialmeasures

Telephone Consumer Protection Act (“TCPA”)

• Regulated Communications

• Automated Telephone Dialing Systems

• Consent to Call– Residential Landlines– Cell Phones

• Form of Consent

TCPA: Warnings

• Notification to Consumer

• Record Retention

• Recommended Policies and Procedures

• Recent Changes

• Exclusions

Contact Information

TRENAM KEMKER

101 E. Kennedy Blvd.

Suite 2700

Tampa, FL 33602

200 Central Avenue

Suite 1600

St. Petersburg, FL 33701

• UDAAP/TCPA

– Amy Drushal adrushal@trenam.com

• FDCPA/FCCPA

– Stephanie Lieb slieb@trenam.com

• ECOA

– Kelly Ruoff kruoff@trenam.com