The Consumer Financial Protection Bureau (CFPB) has set its sights on mandatory arbitration clauses in consumer financial products. The agency announced on April 24th that it is launching a public inquiry into how consumers and companies are affected by using arbitration to resolve disputes. CFPB Director Richard Cordray had this to say in a news release:
Arbitration clauses are found in many contracts for consumer financial products. We want to learn how arbitration clauses affect consumers, and how effective arbitration is in resolving consumers’ issues. This inquiry will help the bureau assess whether rules are needed to protect consumers.
The Dodd-Frank Act that created the CFPB gives the agency explicit authority to study pre-dispute arbitration clauses in consumer financial products. The law also gives the agency the power to issue regulations to protect consumers based on the findings of the study. The CFPB is now asking the public for input on:
• The prevalence of arbitration clauses in consumer financial products and services;
• What claims consumers bring in arbitration against financial services companies;
• If claims are brought by financial services companies against consumers in arbitration;
• How consumers and companies are affected by actual arbitrations; and
• How consumers and companies are affected by arbitration clauses outside of actual arbitrations.
Responses are due by June 23. After the CFPB completes the study, the agency said it will “assess whether imposing conditions or prohibitions on arbitration clauses would better protect consumers and serve the public interest.” Hopefully, this is good news for all consumers.
Source: The National Law Journal
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