CFPB outlines public registry proposal for nonbank terms and conditions
The US Consumer Financial Protection Bureau (CFPB) has outlined a proposal to create a registry, open to the public, containing the terms and conditions of nonbank financial firms that have the potential to inhibit consumers’ rights.
CFPB director Rohit Chopra
Under the proposed rule, nonbank financial companies including payday lending, private student loan origination, and mortgage lending and servicing firms would need to submit information on any terms and conditions they use that look to waive or limit individuals’ rights and other legal protections, supporting the CFPB’s monitoring of supervised markets and enhancing market transparency.
Examples of terms and conditions that attempt to stymie consumer rights, the CFPB says, include waiving military members’ legal protections, undermining credit reporting rights and limiting lenders’ liabilities for bank fees.
“Some companies seek to censor their customers and strip them of their rights by inserting fine print into non-negotiable contracts,” says 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.”
The CFPB says consumers must often sign “lengthy” contracts, which they cannot negotiate, that attempt to remove consumer protections and limit their rights or quiet their complaints and criticisms, which “potentially undermine consumer financial protection law”.
“There is often little choice for consumers except to sign these form contracts due both to their market pervasiveness and the critical role the products and services play in people’s daily lives,” the CFPB says.
