Removing Barriers Blog

Comment Call for CFPB Arbitration Proposed Rule
Posted May 23, 2016 by CUNA Advocacy

We are now welcoming comments from credit unions on the CFPB's recent proposed rule on pre-dispute arbitration clauses.

The CFPB is proposing sweeping changes to the use of pre-dispute arbitration clauses. In October 2015, the CFPB published Small Business Regulatory Enforcement Fairness Act (SBREFA) proposals in conjunction with a Small Business Review panel. The CFPB's proposed rule will be open for a 90 day public comment period ending on August 22, 2016.

The proposed rule would eliminate arbitration clauses that are routinely included in many contracts for consumer financial products, which can protect credit unions from class action lawsuits when requiring arbitration as an alternative dispute resolution process.

Under the proposed rule, financial institutions could still include arbitration clauses for individual disputes, but not for class-actions. The CFPB would provide specific language that must be used in the contract.  The proposal also requires companies that use arbitration clauses to submit claims, awards and other related materials to the CFPB for monitoring.

The proposal also notes that the CFPB intends to publish these materials on its website in some form, with appropriate redactions or aggregation as warranted, to provide greater transparency into the arbitration of consumer disputes.

Please visit our comment call page here for more information about this rule, and to read our comment call.