The Consumer Financial Protection Bureau today released a circular that warns against unlawful or unenforceable terms and conditions in contracts for consumer financial products or services. In a statement, the bureau said that many contracts include terms and conditions claiming to limit consumer rights and protections. One such term is a general liability waiver, “which purports to fully insulate companies from suits even though most states have laws that create hosts of exemptions to these waivers.”
Under the Dodd-Frank Act, “a representation or omission is deceptive if it is likely to mislead a reasonable consumer and is material,” according to the CFPB. The bureau said that its examiners have identified several violations in contract terms and conditions.
“For example, the CFPB found that a respondent bank engaged in a deceptive practice under the [Dodd-Frank Act] when it represented to consumers that because they signed a deposit agreement including broad language directing the bank not to contest legal process, consumers had waived their right to hold the bank liable for improperly responding to garnishment notices; in fact, regardless of the language in the account agreement, consumers had the right to challenge the garnishments,” it said.
