CFPB Removes Changes Regarding Discrimination as an Unfair Practice From UDAAP Exam Manual but Appeals From District Court Order Vacating Changes

In September 2023, the CFPB updated its UDAAP Examination Manual to remove the changes it made in March 2022 which provided that unfair acts or practices encompassed discriminatory conduct, even in circumstances to which federal fair lending laws, such as the Equal Credit Opportunity Act, did not apply.

It has been suggested that this update means the CFPB has retreated from its position that discriminatory conduct can be the basis of a UDAAP violation.  In our view, the update has little significance and was intended only to implement the Texas district court’s order vacating the March 2022 changes.  We do not believe it should be seen as an indication that the CFPB has decided to revisit its interpretation that unfairness can encompass discrimination.  

The CFPB’s continuing adherence to its interpretation is evidenced by the fact that the CFPB has filed a notice with the Texas federal district court that it is appealing its order to the Fifth Circuit.  In its briefing in the district court, the CFPB took the position that the source of its authority to interpret the unfairness prong of UDAAP to encompass discrimination is the unfairness prong itself, and its interpretation did not need to be effectuated through the changes it made to the UDAAP Exam Manual.  Thus, the CFPB in effect has argued that the changes it made to the Exam Manual were superfluous.  

In that regard, there has been some confusion about whether the CFPB’s appeal is timely.  Under the Federal Rules of Appellate Procedure, non-governmental parties must file a notice of appeal within 30 days but the government has 60 days in which to file a notice of appeal.  The district court’s order was entered on September 8 and the CFPB filed its notice of appeal on November 6.  Accordingly, there is no question that the CFPB’s appeal is timely.