It’s no secret that the Consumer Financial Protection Bureau (CFPB) views arbitration agreements in contracts between financial services providers and consumers rather unfavorably. This antipathy has been maintained even after a 2011 Supreme Court decision (ATT Mobility LLC v. Concepcion) affirming the practice. Back in October, the bureau announced its consideration of a proposed rule that would prohibit this practice in some cases, and in other cases, require companies that use arbitration clauses to report information regarding claims filed and awards issued to the CFPB. On May 5th, the CFPB released the proposed rule.
In their client alert, Arbitration Provisions Mauled by Consumer Watchdog, colleagues Christine Scheuneman, Mercedes Tunstall, Amy Pierce and Andrew Caplan examine the rule in depth, pointing out some of its contradictions and areas in which the proposed rule may be susceptible to (the inevitable) legal challenges that will follow.