This bill significantly amends the Consumer Financial Protection Act of 2010 to clarify and restrict the Bureau of Consumer Financial Protection's (CFPB) authority regarding Unfair, Deceptive, or Abusive Acts or Practices (UDAAP). It mandates that the CFPB issue new rules to establish policies for civil monetary penalties, including the application of mitigating factors, and requires a specific definition for "abusive act or practice" within 180 days of enactment.

The legislation introduces several new procedural requirements for the CFPB, including mandating a cost-benefit analysis for any final UDAAP rule and requiring the Bureau to allow public comment on its UDAAP authority. Crucially, it prohibits the CFPB from interpreting its UDAAP authority to encompass discriminatory practices, thereby narrowing the scope of its enforcement capabilities in this area.

Furthermore, the bill redefines the standard for declaring an act "abusive," limiting it to instances of intentional interference with consumer understanding or unreasonable advantage-taking of consumer lack of understanding and reliance. It also establishes a notice and opportunity to cure process, allowing covered persons 180 days to remedy self-identified potential UDAAP violations before the CFPB can pursue legal action, and restricts the CFPB from seeking monetary relief if a good-faith effort to comply is demonstrated.

Enforcement actions for UDAAP must now be brought in specific federal district courts, and the CFPB is prohibited from making alternative claims (e.g., claiming an act is both unfair and abusive). Finally, the bill limits the CFPB's ability to seek civil money penalties for conduct that occurred prior to the most recent consumer compliance rating assignment, though it preserves the Bureau's authority to seek other forms of legal or equitable relief for such conduct.