CFPB Proposes Limitations And Requirements For Arbitration Agreements

On October 7, the Consumer Financial Protection Bureau (CFPB) released an outline of its proposal for a possible rule regarding arbitration clauses in consumer financial product and service agreements.

There are two elements to the CFPB's proposal: (1) Elimination of agreements blocking consumer participation in class actions and (2) submission to the CFPB (and potentially public posting) of arbitral claims and awards.

Enable Consumer Access to Civil Class Actions

The proposal would prohibit the application of arbitration agreements to class action cases. Specifically, the proposal would require that any contract or agreement for a covered consumer financial product or service explicitly state that the arbitration agreement is inapplicable to cases filed in court on behalf of a class unless and until class certification is denied or the class claims are dismissed.