Joint Comments to CFPB on the Proposed Prohibitions on Certain Contract Terms

Re: Comments on Proposed Rule re: Prohibited Terms and Conditions in Agreements for Consumer Financial Products or Services (Regulation AA), Docket No. CFPB-2025-0002; RIN 3170–AB23

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Ladies and Gentlemen:

The American Bankers Association, the Bank Policy Institute, and the Consumer Bankers Association are writing in response to the Consumer Financial Protection Bureau's (CFPB) proposed rule entitled "Prohibited Terms and Conditions in Agreements for Consumer Financial Products or Services (Regulation AA)." We appreciate the opportunity to comment on the proposed rule and urge the CFPB to rescind it for the reasons discussed herein.

The proposed rule would prohibit certain contractual provisions in agreements for consumer financial products or services under the CFPBs authority to prohibit acts or practices that are unfair, deceptive, or abusive (UDAAP) under the Dodd Frank Act. Specifically, the proposal would prohibit covered persons from including in their contracts any provisions purporting to waive substantive consumer legal rights and protections (or their remedies) granted by state or federal law; terms that reserve the financial institution's right to modify the contract after formation; and terms that limit free expression. The proposal would also codify certain terms long prohibited under the Federal Trade Commission’s (FTC) Credit Practices Rule.

I. Summary of our comments.

The CFPB’s prior leadership issued this proposal on January 14, 2025, after the 2024 presidential election. The election clearly indicated the likelihood of new leadership at the CFPB, and therefore, the CFPB should have halted the issuance of new proposals. Instead, it appears that the CFPB rushed to publish this proposal (among others) without the research and analysis necessary for a rule that would require extensive revisions to consumer financial contracts. For this, as well as other reasons set forth below, it is critically important that the CFPB’s incoming leadership rescind this proposal.

First, the CFPB should rescind this proposal because it does not have the authority to prohibit the contract terms identified in the proposal. In a free market economy, contract terms clearly and conspicuously disclosed in a timely manner are generally considered lawful unless specifically prohibited by Congress or a state legislature. The CFPB cannot use its UDAAP rulemaking authority to ban contract provisions that Congress has not prohibited. Congress's decision to authorize the CFPB to name specific acts or practices in consumer finance as unfair, deceptive, or abusive through rulemaking does not give the CFPB legislative carte blanche to expand its authority beyond the bounds Congress has established. Yet, the CFPB attempts to arrogate to itself legislative authority that resides only in Congress and its state counterparts.

Download the comment letter to read the full text.

Joint Comments to CFPB on the Proposed Prohibitions on Certain Contract Terms

I. Summary of our comments.

In Depth

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Joint Comments to CFPB on the Proposed Prohibitions on Certain Contract Terms

I. Summary of our comments.

In Depth

Related Products

Our Experts

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