The Consumer Financial Protection Bureau (CFPB) has proposed a rule establishing a public registry of supervised nonbanks’ terms and conditions in non-negotiable form contracts.
The proposed action stems from contracts claiming to waive or limit consumer rights and protections, that include bankruptcy rights, liability amounts, or complaint rights.
The CFPB maintains the terms and conditions in non-negotiable form contracts mislead consumers to believe the terms or conditions are legally enforceable.
“Some companies seek to censor their customers and strip them of their rights by inserting fine print into non-negotiable contracts,” CFPB Director Rohit Chopra said. “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.”
The proposed rule outlines that nonbanks subject to the CFPB’s supervisory jurisdiction must submit information on terms and conditions in contracts that seek to waive or limit individuals’ rights and other legal protections. The information would be posted in a registry open to the public and other consumer financial protection enforcers.
Terms and conditions that would be included in the proposed registry, per the CFPB, include those that waive servicemembers’ legal protections; undermine credit reporting rights; limit lender liability for bank fees caused by a lender’s repeated debit attempts; and mislead consumers by using unenforceable waivers in mortgage contracts.
If finalized, the proposed rule would increase market transparency and improve risk-based oversight, according to the CFPB. The proposed rule’s public comment period will remain open for 60 days following its publication on the CFPB’s website or 30 days following publication of the proposed rule in the Federal Register – whichever period is longer.