Consumer financial agency considers rules barring companies from blocking class actions
The Consumer Financial Protection Bureau is considering proposed rules that would bar consumer financial companies from using arbitration clauses to block class actions.
CFPB Director Richard Cordray announced the proposals in a press release, saying companies are using arbitration clauses “as a free pass to sidestep the courts and avoid accountability.” The Am Law Litigation Daily (sub. req.) and the Associated Press have stories.
The proposal would allow financial companies to continue to require arbitration for individual disputes.
The Dodd-Frank Act, which created the CFPB, directed the agency to study arbitration clauses in consumer financial agreements. The law allows the CFPB to ban or limit arbitration clauses in consumer financial contracts, through regulations, if it is consistent with study findings.
The study, released in March, looked at 341 cases resolved by arbitration involving credit cards, checking accounts and other financial products. Consumers obtained awards in just 32 cases and debt relief in 46 cases.