CFPB Issues UDAAP Guidance On Contracts for Consumer Financial Products and Services

Published on June 11, 2024 at 3:00 pm

Kristen Larson

Of Counsel at Ballard Spahr LLP

Editor's Note: This article, authored by Kristen E. Larson, John L. Culhane, Jr., & Alan S. Kaplinsky of Ballard Spahr, previously appeared on Ballard Spahr’s Consumer Finance Monitor and is re-published here with permission.

Kenishirotide / Adobestock

On June 4, 2024, the Consumer Financial Protection Bureau (“CFPB”) issued a Consumer Financial Protection Circular 2024-03 (“Circular”) warning that the use of unlawful or unenforceable terms and conditions in contracts for consumer financial products or services may violate the prohibition on deceptive acts or practices in the Consumer Financial Protection Act (“CFPA”). In a related press release, CFPB Director Rohit Chopra said, “Federal and state laws ban a host of coercive contract clauses that censor and restrict individual freedoms and rights. The CFPB will take action against companies and individuals that deceptively slip these terms into their fine print.”

Under the CFPA, a representation, omission, act or practice is deceptive when:

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