CFPB proposes nonbank registry of form contract terms

The Consumer Financial Protection Bureau proposed a rule to establish a public registry of supervised nonbanks’ terms and conditions in “take it or leave it” form contracts.

Form Contracts: The proposal would apply to form contracts that claim to waive or limit consumer rights and protections, such as bankruptcy rights and liability amounts. The CFPB said these contracts can mislead consumers into believing the terms or conditions are legally enforceable.

Public Registry: Under the proposed rule, nonbanks subject to CFPB supervision would need to submit information on terms and conditions in their form contracts that seek to waive or limit rights and protections. That information would be posted in a registry that will be open to the public, including to other consumer financial protection enforcers.

ICBA Monitoring: The proposed rule follows last month’s CFPB proposal to require certain nonbanks to register for a public online registry when they become subject to certain agency or court orders. While the proposals would apply to nonbanks, ICBA is monitoring the developments to determine whether there will be any indirect effect on community banks and their third-party partners.