Both service members and institutions that do business with them should familiarize themselves with the latest updates that may affect their work. One of the latest changes they should learn about is Consumer Financial Protection 2024-03.
This circular discusses unenforceable or unlawful terms and conditions for consumer financial services and products. Do they violate the prohibition on deceptive practices or acts in the Consumer Financial Protection Act (CFPA)?
In summary, yes, ‘service providers’ and ‘covered persons’ must comply with the CFPA’s prohibition on deceptive practices or acts.
About Unlawful and Unenforceable Contract Terms
Many federal laws, including those enforced by the Consumer Financial Protection Bureau (CFPB), render various contract terms unenforceable and unlawful in particular contexts.
A good example is the Consumer Review Fairness Act of 2016. This law generally disallows form contracts that limit consumers’ ability to express their reviews of the sale of services or goods and invalidate these terms and conditions.
Another example concerns the MLA, or Military Lending Act. This law generally disallows consumer credit contract terms that require service members and their dependents to waive their rights to legal recourse.
A recent federal district court division held that the SCRA, or Servicemembers Civil Relief Act, renders unenforceable provisions in contracts concerning service members who waive their rights to enforce their SCRA benefits. In other words, it’s illegal to forcibly make service members waive their SCRA rights as part of a contract.
Let’s say a service member is signing a car loan contract before they render active duty service. It’s illegal for a lending institution to make that person waive their SCRA rights as part of the contract. Waiving one’s SCRA rights should be optional and not required for a military member to be granted a certain service or product.
When enacting one’s SCRA rights, it’s vital to prove that the person is on active duty service. That’s where the SCRACVS can be of service. We can help confirm the active duty status of a person to remain in compliance with the SCRA. Click here and get started with the verification.