Can our Iowa consumer contract waive the customer's statutory claims or bar a class action?
Not under the Iowa Consumer Credit Code. Except in settlement of a bona fide dispute, a consumer may not waive or agree to forego rights or benefits under chapter 537 (Iowa Code § 537.1107(1)), a disputed claim may be settled by agreement only "if the claim is disputed in good faith" (§ 537.1107(2)), and a settlement in which the consumer does waive rights or benefits is invalid if the court as a matter of law finds the settlement to have been unconscionable at the time it was made, the statute naming the competence of the consumer, any deception or coercion practiced upon the consumer, the nature and extent of the legal advice received by the consumer, and the value of the consideration as factors to be considered among others on that issue (§ 537.1107(4)). Separately, a consumer who suffers an ascertainable loss of money or property as the result of a practice prohibited by chapter 714H may bring an action at law to recover actual damages (§ 714H.5(1)), a term the chapter defines and then narrows, because "Actual damages" "does not include damages for bodily injury, pain and suffering, mental distress, or loss of consortium, loss of life, or loss of enjoyment of life" (§ 714H.2(1)), and that action must be brought within two years of the last event giving rise to the cause of action or within two years of discovery of the violation, whichever is later (§ 714H.5(5)). Chapter 714H already restricts class actions without any help from the contract: a class action alleging a violation of the chapter shall not be filed unless the attorney general has approved it, and the attorney general shall approve the filing unless the lawsuit is determined to be frivolous (§ 714H.7).
The trap
Read the anti-waiver rule at its real width. Section 537.1107(1) bars waiver of rights or benefits "under this chapter", the Iowa Consumer Credit Code, so on its words it says nothing about a waiver of chapter 714H rights, and nothing read here voids such a waiver; that silence is not permission. The settlement exception is real but narrow: a bona fide dispute, settled in good faith, and still open to an unconscionability finding made as of the time of the settlement. On the class-action side, § 714H.7 is a filing gate rather than a ban, the attorney general must approve unless the suit is frivolous, and it says it does not affect the requirements of any other law or of the Iowa rules of civil procedure relating to class actions. Two things sit outside the chapter 714H action before any contract term is reached. Section 714H.4(1) excludes whole classes of defendant where the merchandise is offered pursuant to a profession or business for which they are licensed or registered, among them insurance companies, attorneys licensed in Iowa and "Financial institutions which includes any bank incorporated under the provisions of any state or federal law, any savings and loan association or savings bank incorporated under the provisions of any state or federal law, and any credit union organized under the provisions of any state or federal law, and any affiliate or subsidiary of a bank, savings and loan association, savings bank, or credit union", and it also excludes "Conduct that is required or permitted by the orders or rules of, or a statute administered by, a federal, state, or local governmental agency." Section 714H.5(7) is then a defence on the merits: a person is not liable "if the person shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adopted to avoid the error."
12 authorities
- statuteIowa Code § 537.1107enactment date not established
The words that state the rule
Except in settlement of a bona fide dispute, a consumer may not waive or agree to forego rights or benefits under this chapter.
- statuteIowa Code § 537.1107enactment date not established
The words that state the rule
A claim by a consumer against a creditor relating to an excess charge, any other civil violation of this chapter, or a civil penalty, or a claim by a creditor against a consumer for default or breach of a civil duty imposed by this chapter, may be settled by agreement if the claim is disputed in good faith.
- statuteIowa Code § 537.1107enactment date not established
The words that state the rule
A settlement in which the consumer waives or agrees to forego rights or benefits under this chapter is invalid if the court as a matter of law finds the settlement to have been unconscionable at the time it was made. The competence of the consumer, any deception or coercion practiced upon the consumer, the nature and extent of the legal advice received by the consumer, and the value of the consideration may be considered, among other factors, with respect to the issue of unconscionability.
- statuteIowa Code § 714H.5enactment date not established
The words that state the rule
A consumer who suffers an ascertainable loss of money or property as the result of a prohibited practice or act in violation of this chapter may bring an action at law to recover actual damages.
- statuteIowa Code § 714H.5enactment date not established
The words that state the rule
An action pursuant to this chapter must be brought within two years of the occurrence of the last event giving rise to the cause of action under this chapter or within two years of the discovery of the violation of this chapter by the person bringing the action, whichever is later.
- statuteIowa Code § 714H.7enactment date not established
The words that state the rule
A class action lawsuit alleging a violation of this chapter shall not be filed with a court unless it has been approved by the attorney general. The attorney general shall approve the filing of a class action lawsuit alleging a violation of this chapter unless the attorney general determines that the lawsuit is frivolous.
- statuteIowa Code § 714H.2enactment date not established
The words that state the rule
“Consumer merchandise” means merchandise offered for sale or lease, or sold or leased, primarily for personal, family, or household purposes.
- statuteIowa Code § 714H.7enactment date not established
The words that state the rule
This section shall not affect the requirements of any other law or of the Iowa rules of civil procedure relating to class action lawsuits.
- statuteIowa Code § 714H.4enactment date not established
The words that state the rule
This chapter shall not apply to any of the following: a. Merchandise offered or provided by any of the following persons, including business entities organized under Title XII by those persons and the officers, directors, employees, and agents of those persons or business entities, pursuant to a profession or business for which they are licensed or registered: (1) Insurance companies subject to Title XIII. (2) Attorneys licensed to practice law in this state. (3) Financial institutions which includes any bank incorporated under the provisions of any state or federal law, any savings and loan association or savings bank incorporated under the provisions of any state or federal law, and any credit union organized under the provisions of any state or federal law, and any affiliate or subsidiary of a bank, savings and loan association, savings bank, or credit union. (4) Persons or facilities licensed, certified, or registered under chapters 135B, 135C, 135J, 148, 148A, 148B, 148C, 149, 151, 152, 152A, 152B, 153, 154, 154B, 154C, 154D, 155A, 156, 169, 522B, 542, 542B, 543B, 544A, or 544B.
- statuteIowa Code § 714H.4enactment date not established
The words that state the rule
g. Conduct that is required or permitted by the orders or rules of, or a statute administered by, a federal, state, or local governmental agency. h. An affirmative act that violates this chapter but is specifically required by other applicable law, to the extent that the actor could not reasonably avoid a violation of this chapter.
- statuteIowa Code § 714H.2enactment date not established
The words that state the rule
“Actual damages” means all compensatory damages proximately caused by the prohibited practice or act that are reasonably ascertainable in amount. “Actual damages” does not include damages for bodily injury, pain and suffering, mental distress, or loss of consortium, loss of life, or loss of enjoyment of life.
- statuteIowa Code § 714H.5enactment date not established
The words that state the rule
A person shall not be held liable in any action brought under this section for a violation of this chapter if the person shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adopted to avoid the error.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.