Registry of Supervised Nonbanks That Use Form Contracts To Impose Terms and Conditions That Seek To Waive or Limit Consumer Legal Protections; Withdrawal of Proposed Rule

CONSUMER FINANCIAL PROTECTION BUREAU <CFR>12 CFR Part 1092</CFR> <DEPDOC>[Docket No. CFPB-2023-0002]</DEPDOC> <SUBJECT>Registry of Supervised Nonbanks That Use Form Contracts To Impose Terms and Conditions That Seek To Waive or Limit Consumer Legal Protections; Withdrawal of Proposed Rule</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Consumer Financial Protection Bureau. <HD SOURCE="HED">ACTION:</HD> Proposed rule; withdrawal. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Consumer Financial Protection Bureau (Bureau or CFPB) is withdrawing its Notice of Proposed Rule: Registry of Supervised Nonbanks That Use Form Contracts To Impose Terms and Conditions That Seek To Waive or Limit Consumer Legal Protections, published on February 1, 2023 (Proposed Rule), and is providing this notice of withdrawal. The Bureau has determined that legislative rulemaking is not necessary or appropriate at this time to address the subject matter of the Proposed Rule. The Bureau will not take any further action on the Proposed Rule. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> The Proposed Rule published February 1, 2023, 88 FR 6906, is withdrawn as of October 29, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> The docket for this withdrawn Proposed Rule is available at <E T="03">https://www.regulations.gov/document/CFPB-2023-0002-0001.</E> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Dave Gettler, Paralegal Specialist, Office of Regulations, at 202-435-7700 or <E T="03">https://reginquiries.consumerfinance.gov/.</E> If you require this document in an alternative electronic format, please contact <E T="03">CFPB_Accessibility@cfpb.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Summary</HD> The Bureau is withdrawing the notice of proposed rulemaking, Registry of Supervised Nonbanks That Use Form Contracts to Impose Terms and Conditions That Seek To Waive or Limit Consumer Legal Protections, published on February 1, 2023, 88 FR 6906. The Proposed Rule would have required that most nonbanks subject to its supervisory authority register in a CFPB system information about their use of certain terms and conditions in form contracts, and would have required the Bureau to publish such information and registrants' identifying information. <SU>1</SU> <FTREF/> <FTNT> <SU>1</SU>   <E T="03">Registry of Supervised Nonbanks That Use Form Contracts To Impose Terms and Conditions That Seek To Waive or Limit Consumer Legal Protections,</E> 88 FR 6096 (Feb. 1, 2023). </FTNT> The Bureau is withdrawing the Proposed Rule, as discussed in more detail in part VI below, based on its conclusion that the significant costs of the proposed registration and publication system are not justified by their uncertain and speculative benefits. As discussed in part VI below, the proposal would have imposed a significant burden on supervised nonbanks in order to collect and publish information of uncertain or speculative value or benefit, mostly about regulated entities' use of lawful terms and conditions. It also would have imposed significant burdens on the Bureau, beyond those the Bureau estimated when it issued the Proposed Rule, which are unwarranted in light of the speculative benefits and additional limitations on the Bureau's resources, as noted below. Given this and the Bureau's focus on limiting regulatory burdens on the American people, the Bureau believes it is appropriate to withdraw this proposal. The Bureau has also considered changes in and updates to its policies, agenda, and objectives in withdrawing the proposal. <HD SOURCE="HD1">II. Background on the Proposed Rule</HD> <HD SOURCE="HD2">A. Terms and Conditions in Form Contracts for Consumer Financial Products and Services</HD> In the Background Section of part II, the Proposed Rule explained the prevalence of form contracts in markets for consumer financial products and services as well as the purported risks associated with certain terms and conditions in these form contracts. Part II.A of the proposal explained that consumer finance companies often include in their agreements with consumers for consumer financial products and services terms and conditions that are non-negotiable. Part II.B of the proposal explained how Federal, state, tribal and local laws disfavor a subset of these terms and conditions that seek to waive or limit the availability of certain legal protections, including those that Federal regulators, Congress, and the States have deemed to be legally impermissible or subject to additional requirements to be enforceable. <SU>2</SU> <FTREF/> Finally, part II.C described some of the purported risks posed by such terms and conditions in form contracts, including risks related to consumer understanding, waivers of rights, and decreased deterrence, compliance, and accountability. Part II.C also provided an overview of certain terms and conditions that the proposal intended to cover and how nonbanks rely on such terms in different markets for consumer financial products and services. <FTNT> <SU>2</SU>  For example, in 1984, the Federal Trade Commission (FTC) issued the Credit Practices Rule, which prohibited the inclusion of certain creditor remedies in consumer credit contracts and generally applied to nonbank creditors. <E T="03">See Credit Practices Rule,</E> 49 FR 7740 (Mar. 1, 1984). Congress also has enacted numerous statutes limiting companies' ability to use certain contract terms. <E T="03">See, e.g.,</E> 10 U.S.C. 987(e)(2) (expressly prohibiting waivers of right to recourse under any State or Federal law in contracts with covered servicemembers). <E T="03">See also generally</E> Proposed Rule, 88 FR 6906 at 6908-14 (discussing other examples); Public Law 114-258, codified at 15 U.S.C. 45b (enacting the Consumer Review Fairness Act of 2016, which prohibits companies that use form contracts from restricting consumers' right to provide negative reviews). </FTNT> However, the Background section largely described these risks to consumers in the abstract and, with the exception of unlawful terms and conditions as discussed further below, provided scant evidence quantifying risks of harm to consumers or the ways in which the proposal would mitigate risks. Moreover, none of the categories of terms and conditions identified in the Background section are <E T="03">per se</E> unlawful and some are even favored by existing law. <SU>3</SU> <FTREF/> <FTNT> <SU>3</SU>   <E T="03">See, e.g., Morgan</E> v. <E T="03">Sundance,</E> 596 U.S. 411, 418 (2022) (explaining how the Federal Arbitration Act contains a general “policy favoring arbitration” pursuant to arbitration agreements); 88 FR 6906 at 6910 (describing examples in Federal mortgage regulations specifically authorizing waivers when needed to facilitate loans to meet a <E T="03">bona fide</E> personal financial emergency). </FTNT> <HD SOURCE="HD2">B. The Proposed Rule</HD> In its proposal, the Bureau proposed to collect information about supervised nonbanks' use of terms and conditions in form contracts that expressly seek to impose the following limitations on consumer rights and other legal protections applicable to the offering or provision of consumer financial products or services in markets the Bureau supervises: waivers of claims a consumer can bring in a legal action; limits on the company's liability to a consumer; limits on the consumer's ability to bring a legal action by dictating the time frame, forum, or venue for a consumer to bring a legal action; limits on the ability of a consumer to bring or participate in collective legal actions such as class actions; limits on the ability of the consumer to complain or post reviews; certain other waivers of consumer rights or other legal protections; and arbitration agreements. The proposal defined these terms and conditions as covered terms and conditions. Covered terms and conditions would have been covered by the proposal even when they are legally enforceable. <SU>4</SU> <FTREF/> Indeed, the Proposed Rule identified a wide range of terms and conditions that would be covered even though they are legally permissible. <SU>5</SU> <FTREF/> <FTNT> <SU>4</SU>  88 FR 6906. </FTNT> <FTNT> <SU>5</SU>   <E T="03">See, e.g.,</E> 88 FR 6906 at 6912 (Servicemembers Civil Relief Act expressly allows servicemembers to enter into certain waivers); <E T="03">id.</E> (describing conditions in which State law permits certain waivers); <E T="03">id.</E> at 6934 (describing how proposal covered liability limits “including when they are permitted by law”); <E T="03">id.</E> at 6909 n.17 (“existing law permits certain contractual waivers or limitations in consumer contracts” that would be required to register); <E T="03">id.</E> at 6911 (mortgage regulations permit consumers to waive rescission rights in certain circumstances); <E T="03">id.</E> at 6913 (“permissible arbitration agreements”). </FTNT> Under the Proposed Rule, nonbank covered persons subject to the Bureau's supervisory authority would have been required to file annual reports with the CFPB regarding both the covered terms and conditions that they include in their form contracts, as well as any court or arbitrator decision on the enforceability of such terms. <SU>6</SU> <FTREF/> The Proposed Rule estimated over 7,300 supervised nonbanks would be required to register, including those engaged in mortgage lending, private student loan origination, payday lending, and any of the five markets where the Bureau has defined nonbank larger participants—consumer reporting, consumer debt collection, automobile finance, student loan servicing, and international money transfers. <SU>7</SU> <FTREF/> <FTNT> <SU>6</SU>   <E T="03">See</E> proposed §§ 1092.301(i) (defining “[u]se of a covered term or co ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 50k characters. 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