On May 1, the U.S. Court of Appeals for the Fifth Circuit dismissed the Consumer Financial Protection Bureau’s (CFPB or Bureau) appeal concerning the vacated amendments to its Unfair, Deceptive, or Abusive Acts and Practices (UDAAP) Examination Manual. This dismissal, following a joint stipulation by the parties, aligns with the CFPB’s newly announced supervision and enforcement priorities for 2025.
As background, in March 2022, the CFPB announced that it would begin targeting discrimination as an unfair practice under its UDAAP authority, thus vastly expanding the reach of its anti-discrimination enforcement beyond the limits of the Equal Credit Opportunity Act (ECOA). The U.S. Chamber of Commerce and several banking trade associations subsequently initiated a lawsuit contesting the CFPB’s authority to bring discrimination claims under the “unfair” prong of UDAAP against financial institutions for noncredit products, arguing that such actions exceeded the Bureau’s statutory authority. The district court then vacated the amendments, citing constitutional concerns over the CFPB’s funding and overreach of its UDAAP authority. In September 2023, the CFPB removed the changes to its UDAAP Examination Manual regarding discrimination as an unfair practice but appealed the district court order vacating those changes.
The dismissal of the appeal aligns with a CFPB memo released last month, discussed here, in which Chief Legal Officer Mark Paoletta outlined the Bureau’s new priorities, reflecting a strategic shift away from novel legal theories and toward areas clearly within the Bureau’s statutory authority. The Bureau plans to concentrate its efforts on depository institutions, restoring its focus to the levels seen in 2012, and will prioritize enforcement actions involving proven intentional discrimination rather than relying solely on statistical evidence.
