The Future Of Mandatory Consumer Arbitration Clauses

Arbitration as a means of dispute resolution is intended to help consumers and businesses save time and money and achieve fair results when compared to traditional litigation. Millions of contracts for consumer financial products and services have a pre-dispute arbitration clause ("arbitration clause") that requires consumers and financial institutions to resolve their disputes through arbitration, rather than through the court system.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") required the Consumer Financial Protection Bureau ("CFPB" or "Bureau") to study arbitration agreements and submit its findings in a report to Congress ("CFPB Study").¹ In sharp contrast to the intent of arbitration clauses, the CFPB Study, released in March 2015, concluded that the overwhelming majority of consumers are unaware whether their financial products and services contracts require resolution of disputes through arbitration or through