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Comments due on CFPB proposed registry of supervised nonbanks with contracts seeking to waive or limit legal protections


The CFPB has announced a proposed rule that would create a public registry of supervised nonbanks that use form contracts to impose terms and conditions seeking to waiver or limit consumer legal protections such as bankruptcy rights, liability amounts, or complaint rights. Under the proposed rule, nonbanks subject to the CFPB’s supervisory jurisdiction would need to submit information on terms and conditions in form contracts they use that seek to waive or limit individuals’ rights and other legal protections. That information would be posted in a registry that will be open to the public, including to other consumer financial protection enforcers.

“Some companies seek to censor their customers and strip them of their rights by inserting fine print into non-negotiable contracts,” said CFPB Director Rohit Chopra. “The CFPB is proposing a registry of these contract clauses to find out where people are unable to speak up when they’ve been harmed."

Some examples of terms and conditions that would be included in the proposed registry are those that:

  • Waive servicemembers' legal protections: some companies include banned arbitration agreements to try to avoid accountability for loans to military families. Other companies have faced regulatory action related to how they obtain waivers of SCRA protections.
  • Undermine credit reporting rights: In contracts for credit monitoring products, some consumer reporting companies use terms and conditions that seek to block the ability of consumers to pursue legal action, including through class action lawsuits, to remedy alleged violations of the Fair Credit Reporting Act.
  • Limit lender liability for bank fees caused by a lender's repeated debit attempts
  • Mislead consumers by using unenforceable waivers in mortgage contracts: CFPB examiners have regularly identified deceptive acts and practices committed through mortgage lenders’ use of waivers and limitations that are inconsistent with the Truth in Lending Act’s restrictions on the use of waivers and limitations in such transactions.

The public comment period will remain open for 60 days following publication of the proposed rule on the CFPB's website or 30 days following publication of the proposed rule in the Federal Register, whichever period is longer.

Publication and comment period update: Published in the Federal Register at 88 FR 6906 on 2/1/2023, with comment period ending 4/3/2023.

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