This resolution seeks to overturn the Consumer Financial Protection Bureau’s withdrawal of its guidance regarding unlawful and unenforceable contract terms.
Catherine Cortez Masto
Senator
NV
This joint resolution seeks to exercise congressional disapproval of a recent Bureau of Consumer Financial Protection action. Specifically, it aims to nullify the Bureau's withdrawal of "Consumer Financial Protection Circular 2024-03," which addresses unlawful and unenforceable contract terms. If passed, the Bureau's withdrawal would be voided, rendering it without force or effect.
Congressional Resolution Aims to Block CFPB From Dropping Rules Against Unenforceable Contract Terms
This joint resolution uses the Congressional Review Act to stop the Consumer Financial Protection Bureau (CFPB) from withdrawing its own guidance on 'deceptive' contract terms. Specifically, it targets the bureau's attempt to pull back Circular 2024-03, a policy that essentially tells banks and lenders they can't put illegal or unenforceable clauses in the fine print just to scare you away from your rights. By blocking the withdrawal, this resolution keeps the original consumer protection rules active and enforceable.
The Fine Print Fight
The core of this issue is about what happens when you sign a contract for a credit card, a loan, or a bank account. Sometimes, companies include terms that are actually illegal under state or federal law—like a clause saying you can't sue them even if the law says you can. Circular 2024-03 makes it clear that including these 'zombie' terms is a deceptive practice because it tricks you into thinking you have no legal recourse. If this resolution passes, it prevents the CFPB from backing down, ensuring that a lender can't legally hide behind a contract term that a court has already ruled invalid.
Why the Reversal Matters
For the average person juggling a car note and a mortgage, this is about transparency. Imagine a local contractor or a small business owner who signs a financing agreement containing a 'waiver of liability' that is actually prohibited in their state. Without this guidance in place, the lender might use that illegal clause to bully the borrower into dropping a legitimate complaint. By forcing the CFPB to keep its original stance, the resolution ensures that regulators can still penalize companies that use 'unlawful and unenforceable' terms as a shield against accountability.
The Regulatory Tug-of-War
While the resolution protects consumers from being misled by the fine print, it also highlights a messy back-and-forth in how our government works. The CFPB initially issued the guidance, then moved to withdraw it, and now Congress is stepping in to say 'no, keep it.' For financial institutions, this creates a bit of a moving target for compliance. However, for the person at the kitchen table, the outcome is straightforward: it maintains a standard where the contracts you sign aren't allowed to include fake rules designed to trick you out of your consumer rights.