CFPB Bulletin on UDAAPs That Impede Consumer Reviews

3 min

The Consumer Financial Protection Bureau (CFPB) issued a compliance bulletin regarding potentially illegal practices related to consumer reviews. The bulletin seeks to promote reviews about financial products and services that accurately reflect consumer opinions and experiences. The guidance also warns that practices like posting fake reviews or inserting clauses that forbid a customer from publishing an honest review may be a UDAAP under the Consumer Financial Protection Act (CFPA).

Why it matters: This regulatory action is yet another attempt by the Chopra CFPB to accomplish its goals through executive action without waiting for a rulemaking. The bulletin echoes the Federal Trade Commission's efforts to deter fake reviews and related fraud across the digital economy. The FTC recently voted to put hundreds of businesses on notice about fake reviews and misleading endorsements, which places those entities at risk for significant penalties if they engage in such misconduct.

What Chopra is saying: "In America, no corporation should be able to silence a customer from posting an honest review online," said CFPB Director Rohit Chopra in a press release, "CFPB Issues Policy on Contractual 'Gag' Clauses and Fake Review Fraud." It threatens that "companies will face consequences for illegally manipulating or suppressing consumer reviews." According to Chopra, "Corporate disinformation campaigns that suppress legitimate reviews or manufacture fake reviews are not only a threat to free speech and fair competition, they are also illegal."

The details: Chopra's action to highlight potential UDAAPs in the collection and use of consumer reviews by financial services providers is another step to seek to promote competitive markets, a theme he has been pushing since his return to the CFPB. Sections 1031 and 1036 of the CFPA prohibit a covered person or service provider from engaging in an "unfair, deceptive, or abusive act or practice" that is "in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service."

The CFPB's bulletin describes certain business practices related to customer reviews that are generally unlawful under the CFPA, including:

  • Contractual 'Gag' Clauses;
  • Fake Reviews; and
  • Review Suppression or Manipulation

The CFPB's press release offers this warning: "Banks and financial companies should ensure that their customer review practices comply with all applicable laws, including the Consumer Financial Protection Act. Violations are subject to civil penalties and other legal consequences."

CFPB Bulletin 2022-05, Unfair and Deceptive Acts or Practices That Impede Consumer Reviews, is available here.

* * * * *

Related Articles:

What to Expect When You're Under a CFPB Investigation – Negotiating the Scope of the CID

Navigating CFPB Examinations: Best Practices for Success

Consumer Financial Services Outlook 2022

FTC "Blankets Industry" with Notice of Penalty Offenses Concerning Deceptive Reviews and Endorsements

Customer Reviews: The Dos and Don'ts

Gagging Gag Clauses under the Consumer Review Fairness Act

FTC's Snack Service Settlement Reminds DTC Companies Not to Incentivize Reviews