As they say, the devil is in the details. Just ask the Consumer Financial Protection Bureau (CFPB).
The agency has issued a circular cautioning consumers that financial institutions such as debt collection companies, student loan servicers, and mortgage originators are using the fine print tactic to try to trick them into believing they have given up certain legal rights or protections.
The agency also put its foot down, telling those companies that they’ve got eyes on them. “Federal and state laws ban a host of coercive contract clauses that censor and restrict individual freedoms and rights,” said CFPB Director Rohit Chopra. “The CFPB will take action against companies and individuals that deceptively slip these terms into their fine print.”
The CFPB understands that we as consumers are pretty lax when it comes to reading all the fine print in the deals we sign. Companies that consumers deal with and buy from understand that, too, and their contracts often include terms and conditions that claim to limit consumer rights and protections.
“This fine print may just be an attempt to confuse people about their rights,” the CFPB warns, adding that a common example is the 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.
Who’s in the agency’s crosshairs?
The CFPB hasn’t publicized who exactly it’s going after, but all any company has to do is look at what the agency has done in the past with respect to this type of conduct:
Consumers with bank accounts: The CFPB concluded that Bank of America deceived consumers through contract terms that waived their rights to hold the bank responsible for improperly responding to garnishment orders. These terms were inserted into deposit agreements with broad fine print.
Ask Jennifer, a ConsumerAffairs reviewer from Dallas Tex. In a recent dust-up with Bank of America, she too had an issue like the CFPB is investigating. “This is pure injustice and because of the fine print they can do this,” she claimed.
Mortgage borrowers: CFPB examiners have repeatedlyfound examples of deceptive contract terms purporting to waive mortgage borrowers’ rights that cannot be waived.
Remittance transfer consumers: The CFPB found that a remittance transfer provider violated the Consumer Financial Protection Act’s deception prohibition when it included misleading statements in disclosures purporting to limit consumers’ error resolution rights, which would be unenforceable under the Electronic Fund Transfer Act and the Remittance Rule.
Auto loan borrowers: The CFPB also found that Nissan Motor Acceptance included language in contracts that indicated that consumers could not exercise bankruptcy rights, when in fact, waivers of bankruptcy rights generally are void as a matter of public policy.
Naming names
In an effort to protect consumers, the CFPB is creating a public database of nonbank financial companies that violate consumer laws. Once a company is listed on that registry, lenders will be required to report specific final agency and court orders and judgments, including consent orders and stipulated orders.
The CFPB feels it has no other choice but to do this since consumers – on the whole – don’t have state regulators or other entities tracking this information.
However, there’s already resistance. “MBA is disappointed with the CFPB’s final rule of a Public Orders Registry, as it creates a costly and duplicative reporting framework for the mortgage industry,” Pete Mills, the Mortgage Bankers Association’s senior vice president of residential policy,” told HousingWire.
Disappointing or not, the CFPB isn’t likely to back down and doesn’t want consumers to either. In addition to its new efforts, the agency restated that it continues to watch for companies that insert clauses into contracts that forbid a customer from publishing an honest review – an arm twist that may violate the Consumer Financial Protection Act.
The CFPB additionally has highlighted that certain tuition payment plans include terms and conditions that are likely unenforceable. In addition, the CFPB recently filed an amicus brief with the Justice Department to ensure that service members can file lawsuits to enforce the Servicemembers Civil Relief Act regardless of unenforceable fine print.
If any company – especially a financial institution – tries to strongarm you with fineprint pushback, let the CFPB know. You can file a complaint with the agency, here.