The Consumer Financial Protection Bureau is proposing a new rule to prohibit contractual provisions in agreements for consumer financial products or services that waive “substantive” consumer legal rights and protections, the bureau announced today.
The proposed rule seeks to crack down on what the CFPB views as abuses in standard-form contracts that consumers sign to use a wide variety of services and products. While the CFPB acknowledges that such contracts are more practical than drafting individual contracts for each consumer, “they are also used to give large corporations undue economic advantage and constrain the personal autonomy and freedom of individual consumers. Because companies (and their lawyers) draft standard-form contracts, they have broad discretion in what terms and conditions to include.”
According to a CFPB summary, the proposed rule would prevent agreements and contracts containing language in which the signers “opt-out” of or waive federal and state consumer protection laws; bar companies from fining, suing or deplatforming based on consumer comments, reviews or political or religious views; prevent companies from unilaterally updating contracts in their favor; and update prohibitions against taking a consumer’s property without judicial due process or oversight—including a prohibition against “confessions of judgment.”
Comments are due April 1, 2025. The proposed rule would not be finalized until after President-elect Trump takes office, and it is unclear whether his administration will choose to pursue it. This week, the American Bankers Association and 52 state bankers associations asked Trump to pause all open rulemakings and review the policies enacted by regulators during the Biden administration.
