5 Steps to Reduce UDAAP Risk
- Understanding UDAAP
UDAAP is different from other technical regulations in that it requires a holistic view of the circumstances and must be considered from a reasonable consumer’s perspective.
Therefore, your organization must have an active risk management program to review, analyze and mitigate potential UDAAP risks if it is to survive CFPB’s sweeping authority.
- Be consistent
The easiest way to increase UDAAP risk is to market in a manner that is inconsistent with your full disclosure of practices.
If you review your contractual terms and existing procedures regularly, it will be easier to identify situations where your marketing approach is inconsistent with your business’es practices and take action to align and correct them.
- Draft a UDAAP policy
A plan that outlines your organization’s commitment to refrain from acts or practices that could be considered unfair, deceptive or abusive is one of the best ways to make the UDAAP concept more tangible in your organization.
It doesn’t have to be too detailed either; just a general outline of what the steps are that you can take to review and minimize UDAAP risks.
- Monitor your Partners
One common theme in UDAAP violations often originates from 3rd party service providers that are not being monitored.
Your vendor’s management program should include a UDAAP risk assessment plan, in addition to actively monitoring the partnership over time.
- Train Your Staff
Regular UDAAP training and public recognition and appraisal for employees who raise UDAAP concerns are the best defense your organization can have against UDAAP enforcement actions.UDAAP is here to stay, and although its definition is likely to remain vague, following these steps will help your business steer clear of unknowingly committing consumer violations as well as their resulting enforcement actions and penalties. Contact us today to find out how we can help monitor your front lines and ultimately help you avoid incurring the wrath of UDAAP.