CFPB Seeks Comments On Rule Curtailing Use Of Mandatory Arbitration Clauses

Anthony DiResta and Kwamina Thomas Williford are Partners and Brian Goodrich is an Associate in the Washington D.C. office

The Proposed Rule Would Increase Companies' Exposure to Consumer Class Actions

The Consumer Financial Protection Bureau (CFPB) on May 5, 2016, released a proposed rule for public comment that would significantly limit companies' use of mandatory arbitration clauses in contracts with consumers.

The CFPB's proposed rule has two main components. First, the proposed rule would prohibit companies that provide consumer financial products and services from using agreements with consumers that require arbitration of any future dispute between the parties in order to prevent the consumer from filing or participating in a class action. Second, the proposal would require companies involved in arbitrations pursuant to pre-dispute arbitration agreements to submit records relating to the arbitrations to the Bureau.