📜CFPB Proposes Rule to Ban Unfair Contract Terms in Financial Services
Prohibited Terms and Conditions in Agreements for Consumer Financial Products or Services (Regulation AA)
Summary
The Consumer Financial Protection Bureau (CFPB) is proposing to prohibit certain contractual provisions in agreements for consumer financial products or services. The proposal would prohibit covered persons from including in their contracts any provisions purporting to waive substantive consumer legal rights and protections (or their remedies) granted by State or Federal law. The proposal would also prohibit contract terms that limit free expression, including with threats of account closure, fines, or breach of contract claims, as well as other contract terms. The proposal would also codify certain longstanding prohibitions under the Federal Trade Commission's (FTC) Credit Practices Rule.
Agencies
- Consumer Financial Protection Bureau
Business Impact
$$ - Med
The proposed regulations directly affect businesses in the consumer financial sector, prohibiting unfair contract terms that may insulate companies from accountability. This includes unilateral amendments, waivers of consumer rights, and limitations on free expression, impacting compliance, operational practices, and potential legal exposure.