WASHINGTON, D.C. — CFPB announces final rule to ban class action waivers in arbitration clauses
The Consumer Financial Protection Bureau (CFPB) has issued its long-anticipated final rule on arbitration clauses in contracts governing consumer financial products and services. While the CFPB is not banning arbitration clauses outright, the new rule would prevent the use of arbitration provisions to block class action lawsuits. The rule is set to go into effect in eight months, but a major fight is already brewing as industry groups and congressional Republicans mobilize in opposition to it.
The final rule has two main components: First, the rule would prohibit companies from using pre-dispute arbitration agreements to block consumer class actions in court, and it would require them to include language in their agreements reflecting this limitation. Second, the rule would require companies that use pre-dispute agreements to submit certain records relating to arbitral and court proceedings to the Bureau.
Read more about the CFPB’s arbitration ruling at JD Supra.