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The CFPB published a proposal on Oct. 29, 2025, to rescind (the proposed rescission) a previously proposed rule that would have required nonbanks subject to the agency's supervision to register information regarding terms and conditions in form contracts in a CFPB system, information which would subsequently be published by the CFPB.
Proposed Rule Background
The CFPB previously published the 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" (the proposed rule), on Feb. 1, 2023, under the Biden-era CFPB led by then-CFPB Director Rohit Chopra. The proposed rule arose from the "prevalence of form contracts in markets for consumer financial products and services" and certain risks stemming from the terms and conditions therein.
Specifically, the proposed rule applied to the following terms and conditions:
- 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 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
- arbitration agreements
The Biden-era CFPB was concerned with terms and conditions that are non-negotiable in agreements for consumer financial products and services. Specifically, the proposed rule highlighted risks "related to consumer understanding, waivers of rights, and decreased deterrence, compliance and accountability" arising from terms and conditions for consumer financial products and services that are non-negotiable. The Biden-era CFPB, accordingly, concluded that the benefits associated with eliminating these risks outweighed any cost to covered entities.
Reasoning Behind Proposed Rescission
However, the Trump-era CFPB, currently led by Acting Director Russell Vought, disagreed with the proposed rule's characterization of the risks posed to consumers, as well as the unnecessary burden the proposed rule imposed on those subject to its terms. In the proposed rescission, the CFPB first noted that the risks were described in the "abstract," without "evidence quantifying risks of harm to consumers or the ways in which the proposal would mitigate risks," the risks are not "per se unlawful," and many of the terms and conditions may even be favorable permissible under existing law.
In addition to the unsubstantiated risks, the proposed rescission also highlighted the costs to supervised nonbanks with respect to both registration and publication burdens. Specifically, the estimated 7,300 supervised nonbanks 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" would expend more than 200,000 hours identifying covered terms and conditions and completing the registration process. This burden, the CFPB noted, would be "unduly high and unwarranted, particularly in light of the speculative nature of the benefits."
Additionally, beyond registration, the CFPB noted that publication of the covered terms and conditions likewise would not justify associated costs, as the proposed rule "would have 'a minimal impact on consumer behavior' and ... the [agency] lacks sufficient data to quantify purported benefits to the public interest." Moreover, the proposed rule would "cause significant reputational harm because it would 'name and shame' or 'scare and shame' supervised nonbanks" without any established benefit to consumers.
The proposed rescission is the latest demonstration of the CFPB's efforts to reduce compliance burdens. Since the change in administration in January, the CFPB has taken action to eliminate or modify all rules or guidance documents that exceed the scope of the agency's statutory authority or impose obligations without utilizing the rulemaking process.
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