CFPB Proposes Effective Ban On Class Waivers In Arbitration Agreements

Just this week, the CFPB announced that it is considering proposing rules that would "ban consumer companies from using 'free pass' arbitration clauses to block consumers from suing in groups to obtain relief." The proposals being considered would not ban arbitration clauses in their entirety. Among the proposals, arbitration clauses would have to explicitly state that they do not apply to cases filed as class actions unless and until the class certification is denied by the court or the class claims are dismissed in court. The proposals also seek more oversight of the arbitration process by requiring companies that use arbitration clauses for individual disputes to submit information to the CFPB regarding the arbitration claims filed and awards issued.