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Volume XIII, Number 84


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Industry Groups to CFPB: Take Back UDAAP Anti-Discrimination Policy

On June 28, the American Bankers Association, Consumer Bankers Association, Independent Community Bankers of America, and the U.S. Chamber of Commerce affirmed in a letter to CFPB Director Rohit Chopra that the CFPB should rescind its recent updates to the exam manual allowing for the examination of financial institutions unfair, deceptive, and abusive acts or practices or UDAAPs. The group conveyed to Director Chopra that “Congress did not authorize or intend for the CFPB to “fill gaps” between the clearly articulated boundaries of antidiscrimination statutes with its UDAAP authority.” (We discussed this exam manual update in a previous blog post here).

On the same day, the group sent to the Bureau its white paper, “Unfairness and Discrimination: Examining the CFPB’s Conflation of Distinct Statutory Concepts,” which highlights the primary legal flaws in the CFPB’s action, which include the following:

  • The CFPB’s conflation of unfairness and discrimination ignores the text, structure, and legislative history of the Dodd-Frank Act.

  • The CFPB’s view of “unfairness” is inconsistent with decades of understanding and usage of that term in the FTC Act and with the enactment of ECOA.

  • The CFPB’s view is contrary to Supreme Court precedent regarding disparate impact liability.

  • The CFPB’s action is subject to review by courts because it constitutes final agency action – a legislative rule – that is invalid, both substantively and procedurally.

  • The CFPB’s action is subject to Congressional disapproval under the Congressional Review Act.

Putting It Into Practice: The trade associations argue that the CFPB can, in fact, take the course of action enumerated in the “update,” but must do so in accordance with established law. The update has a large impact on financial institutions and may alter the legal requirements of these businesses. Impacted institutions should continue to stay abreast of these updates and follow any possible developments between the CFPB and these trade associations.

Copyright © 2023, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 195

About this Author

Moorari Shah Bankruptcy Lawyer Sheppard Mullin Law Firm

Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm's Los Angeles and San Francisco offices. 

Areas of Practice

Moorari combines deep in-house and law firm experience to deliver practical, business-minded legal advice. He represents banks, fintechs, mortgage companies, auto lenders, and other nonbank institutions in transactional, licensing, regulatory compliance, and government enforcement matters covering mergers and acquisitions, consumer and commercial lending, equipment finance and leasing, and supervisory examinations,...

A.J. S. Dhaliwal Bankruptcy Attorney Sheppard Mullin Washington DC

A.J. is an associate in the Finance and Bankruptcy Practice Group in the firm's Washington, D.C. office. 

A.J. has over a decade of experience helping banks, non-bank financial institutions, and other companies providing financial products and services in a wide range of matters including government enforcement actions, civil litigation, regulatory examinations, and internal investigations.

With a diversified regulatory, compliance, and enforcement background, A.J. counsels financial institutions in matters involving...


Gabriel is an Associate on the Telecom team and the Co-Lead Associate on the Blockchain and Digital Assets team in the firm’s Washington, D.C. office. He is a Blockchain Law Professional as Certified by the Blockchain Council.

At Sheppard Mullin, Gabriel assists the Telecom team in all aspects of communications law and regulation including, satellites, spectrum, 5G implementation, media companies, and new technologies. He assists the Blockchain and Digital Assets team in legal issues relating to the use of blockchain technology, social media, internet, video games, online gambling,...