CFPB Director Cordray Elaborates On Planned Consumer Arbitration Rulemaking

In the latest public pronouncement on the Consumer Financial Protection Bureau's (CFPB's) intention to engage in rulemaking to ban the use of certain arbitration clauses in consumer contracts, CFPB Director Richard Cordray recently elaborated on the CFPB's goals in remarks delivered at a meeting of the Consumer Advisory Board. He emphasized that the proposed rule would not—at least for now—completely ban all "pre-dispute" arbitration clauses, but rather would prohibit only such provisions that prevent group lawsuits such as class actions.

As we previously reported, on October 7 the CFPB announced its intention to explore rulemaking to ban these types of arbitration clauses in consumer contracts. If enacted, the rule would require consumer contracts for a wide range of financial services and products to explicitly state that their arbitration clauses do not apply to class-action cases, at least until class certification is denied by a court, or the class claims are