A recent conversation with a compliance officer took me back to the earliest days of my career. The bank is in the middle of a conversion to a new core accounting system. One of the company reps suggested the bank adopt the 365/360 method of accruing interest. Apparently management was excited about the increased yields on the loan portfolio and wanted to move immediately on the suggestion. The compliance officer wanted to know if there […]
Tag: UDAAP
UDAAP – LIST OF VIOLATIONS
The emphasis on Unfair, Deceptive and Abusive Acts or Practices (UDAAP) is increasing. Violations are being cited with increasing frequency. The civil monetary penalties being imposed are substantial. While all of the federal regulatory agencies focus on the issue, the most intense focus seems to come from the Federal Deposit Insurance Corporation (FDIC). While all of the FDIC’s regions appear to be focusing on the issue, the most intense focus appears to be coming from […]
HOW UNEARNED DISCOUNT POINTS MAY RESULT IN UDAAP VIOLATIONS
This is the second part of a five-part series that explores issues related to discount points. The previous article provided a primer on discount points. This article explores UDAAP concerns that result from unearned discount points. Unearned discount points may result in charges of unfair, deceptive or abusive acts or practices (UDAAP). An act or practice is deceptive when: The representation, omission, or practice misleads or is likely to mislead the consumer; The consumer’s interpretation […]
DECEPTIVE MARKETING
We have seen a recent string of enforcement actions from the Consumer Financial Protection Bureau involving deceptive marketing practices. There are lessons for all banks to learn from these actions. What the Actions Had in Common The action was taken by the CFPB in coordination with another federal regulator (FDIC in one and OCC in the other). The action involved huge financial institutions. The action resulted in huge penalties. The actions involved deceptive acts in […]
HUGE UDAAP CASE
On Thursday July 19, 2012, the Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB) each published releases announcing action against Capital One for Unfair, Deceptive and Abusive Acts or Practices (UDAAP) in violation of Section 5 of the Federal Trade Commission Act. This is the CFPBs first public enforcement action. The bank will pay $150 million in damages to 2.5 million affected consumers. This includes $140 million to […]