12 U.S.C. § 5531 — Prohibiting unfair, deceptive, or abusive acts or practices
submitted 16 years ago by Pub. L. 111-203 to r/title-12-BANKS-AND-BANKING · 528 words · no verdicts yet
This section authorizes Bureau actions and rules against unfair, deceptive, or abusive acts or practices involving consumer financial products or services. It sets standards for unfairness and abusiveness and addresses consultation and seasonal income.
(a) In general. The Bureau* may take any action authorized under part E to stop a covered person* or service provider* from committing an unfair, deceptive, or abusive act or practice under federal law in connection with a consumer* transaction involving, or an offer of, a consumer financial product or service*. (b) Rulemaking. The Bureau may issue rules identifying such acts or practices as unlawful and may include requirements to prevent them. (c) Unfairness. (1) The Bureau may not declare an act or practice unfair under this section unless it reasonably concludes that: (A) the act causes or is likely to cause substantial injury that consumers cannot reasonably avoid; and (B) that injury is not outweighed by benefits to consumers or competition. (2) The Bureau may consider established public policies along with all other evidence, but public policy cannot be the primary basis for the decision. (d) Abusive. The Bureau may not declare an act or practice abusive unless it: (1) materially interferes with a consumer’s ability to understand a product or service term or condition; or (2) unreasonably takes advantage of: (A) the consumer’s lack of understanding of material risks, costs, or conditions; (B) the consumer’s inability to protect the consumer’s interests in choosing or using the product or service; or (C) the consumer’s reasonable reliance on a covered person* to act in the consumer’s interests. (e) Consultation. When issuing rules, the Bureau must consult the federal banking agencies or other appropriate federal agencies about consistency with the prudential, market, or systemic objectives those agencies administer. (f) Seasonal income. Bureau rules must provide that, for credit* secured by residential real estate or a dwelling, when documented borrower income, including small-business income, is a repayment source, the creditor may consider that income’s seasonal and irregular nature when underwriting the credit and scheduling payments.
The Bureau* may take any action authorized under part E 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*.
The Bureau may prescribe rules applicable to a covered person* or service provider identifying as unlawful unfair, deceptive, or abusive acts or practices 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. Rules under this section may include requirements for the purpose of preventing such acts or practices.
The Bureau shall have no authority under this section to declare an act or practice in connection with a transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service, to be unlawful on the grounds that such act or practice is unfair, unless the Bureau has a reasonable basis to conclude that—
the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers; and
such substantial injury is not outweighed by countervailing benefits to consumers or to competition.
In determining whether an act or practice is unfair, the Bureau may consider established public policies as evidence to be considered with all other evidence. Such public policy considerations may not serve as a primary basis for such determination.
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—
materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or
takes unreasonable advantage of—
a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service;
the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service; or
the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.
In prescribing rules under this section, the Bureau shall consult with the Federal banking agencies, or other Federal agencies, as appropriate, concerning the consistency of the proposed rule with prudential, market, or systemic objectives administered by such agencies.
The rules of the Bureau under this section shall provide, with respect to an extension of credit* secured by residential real estate or a dwelling, if documented income of the borrower, including income from a small business, is a repayment source for an extension of credit secured by residential real estate or a dwelling, the creditor may consider the seasonality and irregularity of such income in the underwriting of and scheduling of payments for such credit.
Source credit: (Pub. L. 111–203, title X, § 1031, July 21, 2010, 124 Stat. 2005.)
- 2010Enacted · Pub. L. 111-203 · 124 Stat. 2005
A history note hasn’t been published yet. The record shows enactment by Pub. L. 111-203 on 2010-07-21.
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