Companies would be banned from using certain contract clauses that allegedly include waivers of substantial legal rights and fine print that suppresses speech under a proposed rule issued Monday by the federal consumer financial protection agency.
According to the Consumer Financial Protection Bureau (CFPB), the proposal, among other things, would bar companies from using form contracts to opt out of statutes passed by Congress or state legislatures, including protections for servicemembers, laws prohibiting elder fraud, and accountability for corporate lawbreaking.
The proposal would also block firms from fining, suing, or “deplatforming” based on consumer comments (including by sharing negative reviews about a financial firm’s products or services), reviews, or political or religious views – including those with which the company’s management disagrees.
Also under the proposal, firms would be stopped from unilaterally updating contracts in their favor, which the agency said would protect consumers’ right to benefit from the contracts they agree to and would give them the ability to make decisions about their options in the marketplace.
Finally, the agency said of its proposal, it would prohibit firms from forcing customers to automatically plead guilty by codifying existing prohibitions against taking a consumer’s property without judicial due process or oversight. The proposal includes proscriptions against “confessions of judgment,” forcing consumers to essentially plead guilty even if they have defenses.
“While many of the terms in this proposal are already unenforceable in various circumstances, some companies still use them,” the CFPB said in a statement. “The [proposed] rule would create a bright line of prohibition and heightened accountability by, for example, giving state Attorneys General authority to enforce these prohibitions against national banks.”
Comments are due by April 1, the agency said.
CFPB Proposes Rule to Ban Contract Clauses that Strip Away Fundamental Freedoms
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