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ARTICLE · 24 MAY 2016

CFPB Proposes Ban To Mandatory Arbitration Provisions

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The rule applies to any pre-dispute arbitration agreement between consumers and providers of consumer financial products or services as well as any affiliate of a provider that is acting as a service provider to the provider.

United StatesFinance and Banking
Melonia Bennett
Melonia Bennett
Patrick T. Lewis
Patrick T. Lewis
Anthony Sharett
Anthony Sharett
Douglas Vonderhaar
Douglas Vonderhaar
Brett Wall
Brett Wall
Keesha Warmsby
Keesha Warmsby
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On May 5, 2016, the Consumer Financial Protection Bureau (CFPB) announced the issuance of a Notice of Proposed Rulemaking (NPRM) soliciting comments on a proposed rule to prohibit covered institutions from including, in most core consumer contracts, "pre-dispute arbitration agreements" that contain class waivers.1 The proposed regulations would explicitly require the inclusion of the following disclaimer in a pre-dispute arbitration agreement: "We agree that neither we nor anyone else will use this agreement to stop you from being part of a class action case in court. You may file a class action in court or you may be a member of a class action even if you do not file it."2 The regulations would govern all agreements entered into after the regulations took effect (211 days after adoption of the final rule).3

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