Prohibited Terms and Conditions in Consumer Agreements While banks have considerable leeway in crafting their agreements, certain terms and conditions are explicitly prohibited by law. In June 2024, the Consumer Financial Protection Bureau (CFPB) released a circular highlighting unlawful and unenforceable terms that banks must avoid. The circular, “Unlawful and Unenforceable Contract Terms and Conditions” (CFPB Circular 2024-03), outlines a range of prohibited practices that banks need to be aware of. Prohibited terms and conditions commonly seen in agreements that need to be corrected or clarified include: 1. Prohibited Arbitration Clauses in Mortgage and Credit Agreements The inclusion of certain terms in contracts for consumer financial products or services may violate the prohibition when applicable federal or state law renders such contractual terms, including those that purport to waive consumer rights, unlawful or unenforceable. The Truth in Lending Act (TILA) prohibits the inclusion in a Banks that proactively monitor agreements ensure terms and conditions uphold consumer protections and minimize legal risks. 27 NEBRASKA BANKER
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