Senate Strikes Down The CPFB Prohibition On Class Action Waivers

On Tuesday, Oct. 24, , the U.S. Senate voted 51-50 (with Vice President Pence breaking the tie) to strike down a rule issued by the Consumer Financial Protection Bureau (CFPB) that prevented banks, educational institutions and other businesses from including arbitration clauses in consumer contracts that bar consumer class action lawsuits. The Senate vote followed a prior vote in the House to overturn the rule. The White House said Trump "applauds" Congress for voting to repeal the rule, which would have given consumers "fewer options for quickly and efficiently resolving financial disputes."

The proposed rule had a troubled and lengthy history. In 2010, as part of the Dodd-Frank reforms, Congress created the CFPB and directed the new agency to study and promulgate regulations on the use of mandatory arbitration provisions in consumer financial contracts. The CFPB released its study in 2015. It criticized mandatory arbitration provisions and specifically called out