Among the many acronyms, abbreviations, and jargon in the consumer finance industry, there are the obvious ones, and then there the assemblages of characters that look like the results of random pounding on a keyboard. “UDAAP” falls into the second category of UDAAPs—but it’s not nearly as complicated as it looks when you understand the examination procedures. In theory, at least, UDAAP is actually relatively straightforward.
UDAAP stands for “unfair, deceptive, or abusive acts and practices.” The Consumer Financial Protection Bureau, which regulates the consumer finance market, usually pluralizes the term—”UDAAPs”—when referring to these acts and practices collectively; others forgo the “s.” Either way, the CFPB, which enforces consumer protection laws by monitoring compliance with UDAAP regulations among financial institutions. decides what counts as a UDAAP and what doesn’t, based on the agency’s assessment of how the act or practice in question affects and potentially misleads consumers.
The idea of UDAAP blossomed out of the 2008–2009 financial crisis. The term “unfair, deceptive, or abusive” appears 12 times in the text of the Dodd–Frank Wall Street Reform and Consumer Protection Act, primarily under Title X of the Dodd-Frank Act, which established the CFPB’s authority. CFPB. Indeed, protecting consumers from UDAAPs has been a core objective of the CFPB since day 1.
