The CFPB announced it is considering proposing rules that would ban consumer financial companies from including arbitration clauses that block class action lawsuits in their consumer contracts. Through the Dodd-Frank Act, Congress required the CFPB to study the use of arbitration clauses in consumer financial markets and gave the Bureau the power to issue regulations that are in the public interest.
The study — released in March of this year — showed that more than 75% of consumers surveyed in the credit card market did not know they were subject to an arbitration clause, and fewer than 7% of those consumers covered by arbitration clauses realized that the clauses restricted their ability to sue in court.
The Bureau is publishing an outline of the proposals under consideration in preparation for convening a Small Business Review Panel to gather feedback, the first step in the process of a potential rulemaking. The public is invited to submit written comments when the proposed regulation is issued.