The Consumer Financial Protection Bureau ("CFPB") requested comments on a proposed rule to prohibit mandatory arbitration clauses. The request was published in the Federal Register.
The proposed rule (i) prohibits covered providers of certain consumer financial products and services from using any agreement that allows the arbitration of any future dispute between the parties that would bar the consumer from filing or participating in a class action with respect to the covered consumer financial product or service, and (ii) requires a covered provider to submit specified arbitral records to the CFPB if they are involved in an arbitration pursuant to a pre-dispute arbitration agreement.
Companies still would be able to include arbitration clauses in their contracts for the resolution of individual disputes under this proposal. However, in contracts that are subject to the proposal, the clauses would have to state explicitly that they could not be used to prevent consumers from being a part of a class action in court. The proposal provides model language that must be used by companies.
Comments on the proposed rule must be submitted by August 22, 2016.
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