Tony Alexis, the head of enforcement at the CFPB, spoke today in Chicago at a program sponsored by the Committee on Consumer Financial Services at the American Bar Association Section of Business Law’s Annual Meeting. The topic was the “Use of UDAP/UDAAP by Federal and State Regulators.” Mr. Alexis emphasized that the Bureau has very sparingly used the “abusive” prong of its UDAAP authority – in only three consent orders: (Ace Cash Express, American Debt Solutions and CashCall). There was an extended discussion of the CashCall consent order which was predicated on the CFPB claim that the payday loans were void under state law and that there was no merit to CashCall’s claim that the interest rate was lawful under tribal law which preempts state usury laws. It was pointed out by one of the other panelists that CashCall had a plausible argument to the effect that the loans were lawful. Where will the CFPB draw the line? Will they require that lenders disclose in writing any questions regarding the enforceability of provisions in the consumer contract?
