CFPB warns financial institutions: Be careful of using unlawful ‘fine print’

Contract provisions may violate federal law

Credit unions and other financial institutions had better be careful about what they place in the “fine print” of their contracts for products or services, the CFPB warned in an advisory circular published last week.

While many people may ignore the fine print, the CFPB is not doing so. It has discovered instances where the contents of that fine print violate federal law.

“Covered persons may violate the [Consumer Financial Protection Act’s] prohibition on deceptive acts or practices if they include terms, including waiver provisions, in their consumer contracts that are rendered unlawful or unenforceable by federal or state law,” the CFPB said. The circular explains that a representation or omission is deceptive if a reasonable consumer is likely to be misled. This includes waiver provisions that say a consumer agrees not to exercise their legal rights.

“Companies use this fine print tactic to try to trick consumers into believing they have given up certain legal rights or protections,” the CFPB said. Agency officials said that the warning contained in the circular is part of the agency’s broader efforts to ensure freedom and fairness in consumers’ interactions with financial institutions. They added that in some cases, the contents of such fine print “may just be an attempt to confuse people about their rights.”


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