[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6789 Introduced in House (IH)]

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118th CONGRESS
  1st Session
                                H. R. 6789

   To amend the Consumer Financial Protection Act of 2010 to clarify 
   standards for UDAAP enforcement actions brought by the Bureau of 
         Consumer Financial Protection, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 14, 2023

  Mr. Barr (for himself, Mr. Luetkemeyer, Mr. Posey, Mr. Meuser, Mr. 
 Steil, Mr. Sessions, Ms. De La Cruz, Mr. Fitzgerald, Mr. Timmons, Mr. 
 Rose, Mr. Mooney, Mr. Loudermilk, Mr. Norman, Mrs. Kim of California, 
  and Mr. Williams of Texas) introduced the following bill; which was 
            referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
   To amend the Consumer Financial Protection Act of 2010 to clarify 
   standards for UDAAP enforcement actions brought by the Bureau of 
         Consumer Financial Protection, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Rectifying Undefined Descriptions of 
Abusive Acts and Practices Act'' or the ``Rectifying UDAAP Act''.

SEC. 2. MITIGATING FACTORS IN ASSESSING CIVIL PENALTIES.

    Section 1055(c) of the Consumer Financial Protection Act of 2010 
(12 U.S.C. 5565(c)) is amended by adding at the end the following:
            ``(6) Rulemaking.--The Bureau shall, not later than 180 
        days after the date of the enactment of this paragraph, issue a 
        rule that establishes policies and procedures relating to the 
        imposition of civil monetary penalties sought under this 
        subsection, including the application of the mitigating factors 
        described in paragraph (3).''.

SEC. 3. RULEMAKING RELATING TO UNFAIR, DECEPTIVE OR ABUSIVE ACTS OR 
              PRACTICES.

    (a) In General.--Section 1031(b) of the Consumer Financial 
Protection Act of 2010 (12 U.S.C. 5531) is amended by striking 
subsection (b) and inserting the following:
    (b) Rulemaking.--
            ``(1) In general.--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 
        finanical 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.
            ``(2) Cost benefit analysis required.--Any final rule 
        issued by the Bureau relating to abusive, unfair, or deceptive 
        acts or practices shall include a cost-benefit analysis.
            ``(3) Definition of abusive act or practice.--The Bureau 
        shall, not later than 180 days after the date of the enactment 
        of this subsection, issue a rule that defines the term `abusive 
        act or practice' for the purposes of this section.''.
    (b) Opportunity for Comment.--The Bureau of Consumer Financial 
Protection shall, not later than 180 days after the date of the 
enactment of this subsection, allow the public to submit comments with 
respect to any confusion about how the Bureau of Consumer Financial 
Protection uses its authority with respect to unfair, deceptive, or 
abusive acts or practices.

SEC. 4. AUTHORITY TO DECLARE AN ACT UNLAWFUL BASED ON DISCRIMINATION.

    The Bureau of Consumer Financial Protection may not interpret the 
authority of the Bureau of Consumer Financial Protection relating to 
unfair, deceptive, or abusive acts and practices, as such term is used 
in section 1031 of the Consumer Financial Protection Act of 2010, to 
include discriminatory practices.

SEC. 5. CLARIFYING THE ABUSIVE STANDARD FOR THE BUREAU OF CONSUMER 
              FINANCIAL PROTECTION.

    Section 1031 of the Consumer Financial Protection Act of 2010 (12 
U.S.C. 5531) is amended by striking subsection (d) and inserting the 
following:
    ``(d) Abusive.--
            ``(1) In general.--The Bureau shall have no authority to 
        declare an act or practice of a covered person abusive in 
        connection with the provision of a consumer financial product 
        or service, unless the act or practice--
                    ``(A) intentionally and materially interferes with 
                the ability of a consumer to understand a term or 
                condition of a consumer financial product or service; 
                or
                    ``(B) takes unreasonable advantage of--
                            ``(i) a lack of understanding by the 
                        consumer with respect to the possible impact, 
                        material risks, costs, or conditions of the 
                        product or service, or the likelihood of the 
                        risks, costs, or conditions of the product or 
                        service negatively affecting the consumer; and
                            ``(ii) the reasonable reliance the consumer 
                        places on an affirmative action or 
                        representation of such covered person to induce 
                        such consumer to rely on such action or 
                        representation.
            ``(2) Abusive actions.--Conduct of a covered person shall 
        be considered abusive if--
                    ``(A) the act or practice causes or is likely to 
                cause substantial injury to consumers which is not 
                reasonably avoidable by consumers;
                    ``(B) such substantial injury is not outweighed by 
                countervailing benefits to consumers or to competition; 
                or
                    ``(C) the conduct is otherwise prohibited by 
                Federal consumer financial law.
    ``(e) Good-Faith Effort To Comply.--
            ``(1) In general.--The Bureau may not seek monetary relief 
        from a covered person under this section unless the covered 
        person has not established by a preponderance of the evidence 
        that they made a good-faith effort to comply.
            ``(2) Authority to seek legal or equitable remedies.--The 
        limitation described in subparagraph (A) shall not restrict the 
        authority of the Bureau to seek legal or equitable remedies, 
        such as damages and restitution, to redress an identifiable 
        consumer injury caused by the abusive acts or practices of such 
        covered person.''.

SEC. 6. NOTICE AND OPPORTUNITY TO CURE.

    Section 1031 of the Consumer Financial Protection Act of 2010 (12 
U.S.C. 5531) is amended by adding at the end the following:
    ``(g) Notice and Opportunity To Cure.--
            ``(1) In general.--If a covered person self-identifies a 
        potential unfair, deceptive, or abusive act or practice carried 
        out by such covered person, the Bureau shall, not later than 90 
        days after such self-identification, provide a written notice 
        in the form of a potential action and request for response 
        letter or a notice and opportunity to respond and advise letter 
        of the potential unfair, deceptive, or abusive act or practice 
        to such covered person and inform the covered person that such 
        person has 180 days after the date the covered person receives 
        such notice to cure such potential unfair, deceptive, or 
        abusive act before the Bureau may pursue other legal action.
            ``(2) Tolling of statute of limitations.--Any applicable 
        statute of limitations that applies to conduct under which the 
        Bureau has given notice and an opportunity to cure shall not 
        toll until--
                    ``(A) the covered person cures the potential 
                abusive, unfair, or deceptive act or practice and 
                notifies the Bureau that such act or practice has been 
                cured;
                    ``(B) the covered person notifies the Bureau that 
                such covered person will not cure the act or practice; 
                or
                    ``(C) the 180-day period to cure ends.''.

SEC. 7. ABUSIVE, UNFAIR, OR DECEPTIVE ACTS OR PRACTICES ENFORCEMENT 
              ACTIONS.

    (a) In General.--Subtitle E of title X of the Consumer Financial 
Protection Act of 2010 (12 U.S.C. 5561 et seq.) is amended by adding at 
the end the following new section:

``SEC. 1059. UNFAIR, DECEPTIVE, OR ABUSIVE ACTS OR PRACTICES 
              ENFORCEMENT ACTIONS.

    ``Enforcement actions brought by the Bureau under section 1031 
under this title shall be brought in--
            ``(1) the United States district court located where the 
        covered person has its headquarters location; or
            ``(2) the United States District Court for the District of 
        Columbia.''.
    (b) Actions Under Section 1031.--Section 1031 of the Consumer 
Financial Protection Act of 2010 is amended by adding at the end the 
following:
    ``(g) Enforcement Actions.--
            ``(1) In general.--If the Bureau brings an enforcement 
        action under this section, the Bureau shall state with 
        particularity the circumstances that the Bureau alleges 
        constitute violation of this section.
            ``(2) Alternative claims.--If the Bureau brings an 
        enforcement action under this section--
                    ``(A) claiming that an activity is unfair or 
                deceptive, the Bureau may not claim in the alternative 
                that the activity is abusive; and
                    ``(B) claiming that an activity is abusive, the 
                Bureau may not claim in the alternative that the 
                activity is unfair or deceptive.''.

SEC. 8. LOOK-BACK PROVISIONS FOR THE CONSUMER FINANCIAL PROTECTION 
              BUREAU.

    Subtitle B of title X of the Consumer Financial Protection Act of 
2010 (12 U.S.C. 5511 et seq.) is amended by adding at the end the 
following new section:

``SEC. 1029B EXAMINATION PERIOD LIMITATIONS.

    ``(a) In General.--When enforcing Federal consumer financial laws, 
the Bureau may not seek a civil money penalty for any violating conduct 
that occurred prior to the most recent assignment of a consumer 
compliance rating.
    ``(b) Rule of Construction.--This limitation described in 
subsection (a) may not be construed to restrict the ability of the 
Bureau to seek other forms of legal or equitable relief available under 
subparagraphs (A) through (G) of section 1055(a)(2) for any violating 
conduct that occurred prior to the most recent assignment of a consumer 
compliance rating.''.
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