Failure to understand unfair, deceptive or abuse acts or practices (UDAAPs) can result in significant penalties for your nonbank company. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, your employees need to be vigilant about engaging in UDAAPs. A few examples include:
- Taking advantage of a lack of understanding by the consumer of the material risks, costs or conditions
- The consumer is unable to protect his or her interests when using a consumer financial product or service
- The act is likely to mislead the consumer
Some of these acts may also violate state or federal law. But even a lawful act can raise UDAAP concerns and violate the Truth in Lending Act (TILA), the Fair Housing Act (FHA), Fair Credit Reporting Act (FCRA) among others. UDAAPs can occur during any stage in the credit lifecycle too.
Read this guide to better understand the risks and rules of the Dodd-Frank Act.