CFPB Issues Proposed Rule For Nonbank Registration Of Certain Contract Terms And Conditions

The Consumer Financial Protection Bureau issued a Proposed Rule that would require certain nonbank covered person entities to register certain contract terms and conditions with the Bureau pursuant to the Bureau’s statutory authorities. 

The proposed rule would generally require nonbanks subject to Bureau supervisory authority to annually register if they use terms or conditions as defined in the proposed rule in the offering or providing of consumer financial products or services supervised by the Bureau that attempt to waive consumers’ legal protections, to limit how consumers enforce their rights, or to restrict consumers’ ability to file complaints or post reviews.  The Bureau is proposing to collect information concerning supervised nonbanks’ use of these contract terms. 

The Bureau supervises nonbanks in markets for mortgage lending, payday lending, and private student lending, as well as larger participants in markets for consumer reporting, consumer debt collection, student loan servicing, international money transfers, and automobile financing.  Nonbanks offering or providing these consumer financial products and services would be required to register if they meet the coverage requirements of the proposed rule.

Further, to facilitate public awareness and oversight by other regulators including state and tribal regulators, the Bureau is proposing to publish the information it collects, including identifying registrants and their use of these terms and conditions.

The proposed rule would exempt certain nonbanks from the registration requirements, including exemptions for nonbanks with less than $1 million in annual receipts derived from offering or providing supervised consumer financial products or services. 

You can access the Proposed Rule here: www.consumerfinance.gov/rules-policy/rules-under-development/registry-of-supervised-nonbanks-that-use-form-contracts-to-impose-terms-and-conditions-that-seek-to-waive-or-limit-consumer-legal-protections.

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