Allows Unlawful Contract Terms in Consumer Loans
Official: A joint resolution providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Bureau of Consumer Financial Protection relating to the withdrawal of the rule relating to "Consumer Financial Protection Circular 2024-03: Unlawful and Unenforceable Contract Terms and Conditions".
This resolution nullifies a rule that protects consumers from unfair terms in financial contracts, allowing lenders to include such terms without penalty.
This joint resolution reinstates the Consumer Financial Protection Bureau’s (CFPB’s) guidance on unlawful and unenforceable contract terms published in a June 2024 circular. The circular states that consumer financial service providers that include unlawful or unenforceable terms in contracts with consumers (such as a contract that contains an unlawful waiver of the consumer’s right to sue) may be in violation of the Consumer Financial Protection Act's ban on deceptive acts or practices. The CFPB withdrew this circular on May 12, 2025. This joint resolution disapproves of the rule that withdraws this circular.
1. This resolution removes protections against deceptive practices in consumer financial contracts. 2. Consumers may face contracts that include unfair or misleading terms without legal consequences for lenders. 3. The disapproval affects all individuals who take out loans or use financial services. 4. This action could lead to increased financial risks for consumers, as lenders may exploit loopholes. 5. Without this rule, the Consumer Financial Protection Bureau loses a tool to enforce fair lending practices.
This resolution affects consumers who use loans and financial services, potentially exposing them to unfair contract terms.