Question of the Week

  • QUESTION: In regard to UDAAP, what is meant by "the injury must not be outweighed by countervailing benefits to consumers or to competition"?


    To be unfair, the act or practice must be injurious in its net effects — that is, the injury must not be outweighed by any offsetting consumer or competitive benefits that are also produced by the act or practice. Offsetting consumer or competitive benefits may include lower prices or a wider availability of products and services. Nonetheless, both consumers and competition benefit from preventing unfair acts or practices because prices are likely to better reflect actual transaction costs, and merchants who do not rely on unfair acts or practices are no longer required to compete with those who do. Unfair acts or practices injure both consumers and competitors because consumers who would otherwise have selected a competitor’s product are wrongly diverted by the unfair act or practice.  Costs that would be incurred for remedies or measures to prevent the injury are also taken into account in determining whether an act or practice is unfair. These costs may include the costs to the institution in taking preventive measures and the costs to society as a whole of any increased burden and similar matters. 

    Reference: CFPB Exam Manual V. 2, October 2012

Question of the Week Archive

  • QUESTION: Under the Fair Debt Collection Practices Act, does the term debt collector include a bank employee?

  • QUESTION: Does the bank need to provide an adverse action notice if the consumer does not communicate an intent to proceed?

  • QUESTION: Does the bank have to provide a change in terms notice if the account offers terms that will automatically change when a specific event occurs?

  • QUESTION: An MSB with an account states it is not required to register with FinCEN. How can the bank determine if this is true?

  • QUESTION: Does a community development activity need to be located in a low or moderate-income area to qualify under CRA?

  • QUESTION: Do social media marketing campaigns need to follow fair lending advertising requirements?

  • QUESTION: If the bank has charged off a mortgage loan, is a periodic statement required?

  • QUESTION: Are banks required to provide websites that are 508 compliant?

  • QUESTION: Does a successor in interest receive disclosures?

  • QUESTION: Does Regulation O address overdrafts by an executive officer, director of executive officer of an affiliate?

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