Page 39 - December 19. 2024 Bulletin

arbitration or any other nonjudicial procedure as the use of these disclaimers can mislead consumers into
method for resolving any controversy or settling claims believing certain actions are permissible under some
arising out of the transaction. This measure ensures conditions when, in fact, they are not. Courts, including
consumers retain the right to pursue legal action in court in Ruth v. Triumph Partnerships (577 F.3d 790, 801-
if necessary. By maintaining consumer access to judicial 02), have found such phrasing problematic, as it implies
recourse, TILA reinforces critical consumer protection a conditional legality that is often legally unsupported.
measures. See 12 CFR 1026.36(h)(1) § 1026.36 Banks must avoid using disclaimers that create an
Prohibited acts or practices and certain requirements appearance of legality where none exists.
for credit secured by a dwelling. | Consumer Financial
Protection Bureau (consumerfinance.gov) Regular Compliance Reviews and Legal Counsel
Involvement
2. Limitations on Servicemembers’ Legal Rights
Given the complex and evolving regulatory landscape, banks
The Military Lending Act (MLA) generally prohibits are encouraged to conduct compliance reviews of their account
terms in certain consumer credit contracts that require agreements at least annually. Legal counsel should play a key
servicemembers and their dependents to waive the role in this review process, as attorneys can provide expertise on
covered borrower’s right to legal recourse under any current legal standards, identify potential issues with existing
otherwise applicable provision of state or federal law, disclaimers and waivers, and recommend necessary updates to
including any provision of SCRA. See 32 CFR part reflect new legal developments. Banks that proactively monitor
232.8(b) eCFR :: 32 CFR 232.8 -- Limitations. agreements ensure terms and conditions uphold consumer
protections and minimize legal risks.
If the Servicemembers Civil Relief Act (SCRA) applies,
creditors may not compel arbitration. Additionally,
the SCRA was amended to codify the unwaivable right Jefferson Sorley, Jur.M, CRCM, serves as C/A’s
of servicemembers to bring and participate in class Director of Reviews and Products. He has over a
actions, “notwithstanding any previous agreement to the decade of expertise in financial institution compliance.
contrary.” See 50 USC 4042(a) USCODE-2022-title50- Jefferson began his compliance career with a statewide
chap50-subchapVIII-sec4041.pdf (govinfo.gov) community bank in Kentucky. His experience includes
work as auditor/consultant for a top 10 accounting firm
3. Restrictions on Remittance Transfer Consumer
Claims and a regional accounting firm conducting compliance
reviews for bank clients of various sizes throughout the
Under the Electronic Fund Transfers Act (EFTA), US. Prior to joining C/A, Jefferson served as the first
remittance transfer providers are barred from limiting a Compliance Officer for a multi-state mortgage broker
consumer’s ability to seek damages or recover costs and start-up, where he designed and executed the firm’s
attorney fees in disputes. Such limitations are in direct compliance program, including creation of policies,
conflict with provisions found in sections 1693m(a) procedures and training. His competencies include state
(3) and 1693(l) of the EFTA, which establish liability regulatory exam management, compliance program
for providers and ensure that consumers have recourse management, research and application of applicable
to adequate remedies. This protection emphasizes the federal and state laws and statutes, evaluating internal
importance of holding remittance providers accountable controls and developing control recommendations.
for errors, delays, or failures that can have significant Jefferson earned his Juris Master from the Florida State
financial repercussions for consumers. See 15 USC University College of Law, and he holds a Certified
1693(m)(a)(3) and 1693(l) USCODE-2011-title15- Regulatory Compliance Manager (CRCM) designation
chap41-subchapVI.pdf (govinfo.gov) conferred by the American Bankers Association.

4. Disclaimers that Misrepresent Legal Obligations

Contractual disclaimers such as "subject to applicable
law" or "except where unenforceable" are insufficient
to cure the inclusion of otherwise unlawful terms. The

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