Bradley attorney Robert Maddox was quoted in Law360 on the Consumer Financial Protection Bureau’s (CFPB) efforts to curtail contracting practices through public reporting. The CFPB blueprint for requiring nonbank financial companies to report customer contract terms to a public registry may be used to pressure firms into revamping their contracts and could provoke an industry legal challenge.
The CFPB may be hoping to curtail industry contracting practices without technically imposing any new restrictions, instead relying on public reporting and scrutiny — potentially backed up with a few well-targeted enforcement actions — to start shifting the status quo.
That could begin to weed out waiver provisions so aggressively written that few companies would risk using them, including some varieties of arbitration clauses. Maddox noted that a likely concern among many nonbanks will be that this scrutiny could spill over to provisions where the case against them is far less clear-cut.
"Will this identify firms that legally use terms and conditions for consumer waiver? Yes, absolutely," Maddox said. "But once they're all out there, they'll modify their behavior if there's a great deal of concern because, right, wrong or indifferent, we live in a world where we regulate by enforcement."
The full article, “CFPB Plans Could 'Shame' Nonbanks Into Contract Rewrites,” was published in Law360 on January 10, 2023.