CFPB Proposes Registry of Contract Terms Used to Limit Consumer Protections

The CFPB proposed a registry of terms and conditions on form contracts that waive or limit consumer rights and protections.

Under the proposed rule, the CFPB would require supervised nonbank entities to report to the registry on an annual basis any contractual conditions that impair an individual's constitutional, statutory or common law rights, including limiting:

• the type of claim consumers can bring;
• the company's liability to consumers;
• the timeframe, forum or venue to bring a legal action (including class actions); and
• certain other consumer rights or legal protections.

The CFPB said that the report would include information about both the company and its terms and conditions. There would be limited exceptions to the rule, mainly for smaller entities. The CFPB stated that it plans to make the information in the registry available to the public and other regulators.

CFPB Director Rohit Chopra said that the proposal will help balance the "asymmetry in power between the company and the consumer," adding that the proposal follows several other countries that recently enacted laws to prevent the use of unfair terms in form contracts. Mr. Chopra also said the proposal will increase transparency and help the CFPB continue to supervise nonbank financial companies.