CFPB Proposes Rule to Ban Contract Clauses that Strip Away Fundamental Freedoms

Washington, D.C. - Today, the Consumer Financial Protection Bureau (CFPB) proposed a rule that would stop financial companies from forcing Americans to choose between participating in the financial system or giving up their rights, including those guaranteed by the Constitution. The proposed rule seeks to stop companies from using a variety of contract clauses that limit fundamental freedoms, including waivers of substantive legal rights and fine print that suppresses speech.

"To access the American financial system, people should not be forced into forfeiting rights enshrined in law or our Constitution," said CFPB Director Rohit Chopra. "Companies should not weaponize fine print to deplatform or purge people from the financial system."

For decades, companies have slowly eroded Americans' rights by slipping clauses into take-it-or-leave-it contracts that seek an unfair leg up by attempting to deny individuals the benefits of a free market. Over time, fine print governing Americans' lives has grown to impose increasingly intrusive and unusual burdens on Americans, impinging on fundamental freedoms.

In 2023, after taking a number of enforcement actions and observing practices in the market where companies sought to impose unusual conditions in consumer contracts, the CFPB increased its focus on clauses that force consumers to forfeit their rights. The CFPB is issuing this proposed rule to ensure consumer finance contracts focus on the main terms of a deal, instead of fine print to take away people's rights. Specifically, the CFPB is proposing to block companies from:

• Undermining Rule of Law: The Constitution vests legislative power in Congress and reserves important authorities for the States. The CFPB is protecting that legal structure by ensuring that large companies cannot use 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.
• Deplatforming and Suppressing Speech: The rule would bar companies from fining, suing, or deplatforming based on consumer comments, reviews, or political or religious views. It protects consumers' right to exercise free speech, including a consumer's right to share negative reviews about a financial firm's products or services, as well as political speech with which the company's management disagrees.
• Amending Key Terms by Fiat: By stopping companies from unilaterally updating contracts in their favor, the rule seeks to protect consumers' right to benefit from the contracts they agree to and gives people the ability to make decisions about their options in the marketplace.
• Forcing Customers to Automatically Plead Guilty: The CFPB is proposing to codify existing prohibitions against taking a consumer's property without judicial due process or oversight. These longstanding prohibitions include prohibitions against "confessions of judgment," which force 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 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 on the proposed rule must be received on April 1, 2025.

Read today's Notice of Proposed Rulemaking.

Read the CFPB's January 2023 proposed rule to register certain terms in contracts of adhesion.

Read the CFPB's June 2024 Consumer Financial Protection Circular on deceptive practices relating to unenforceable contract terms.

Consumers can submit complaints about financial products and services by visiting the CFPB's website or by calling (855) 411-CFPB (2372).

Employees who believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to [email protected]. To learn more about reporting potential industry misconduct, visit the CFPB's website.