Special Alert: CFPB Issues Arbitration Rule Banning Future Use of Mandatory Arbitration Clauses
Buckley Sandler Special Alert
On July 10, the Consumer Financial Protection Bureau (CFPB) issued its Arbitration Agreements Rule (Rule), which prohibits the use of mandatory pre-dispute arbitration clauses in certain contracts for consumer financial products and services. The Rule is a product of the CFPB’s rulemaking process, which received more than 110,000 comments on its May 2016 proposed arbitration rule, and the CFPB’s March 2015 Arbitration Study. The Rule is set to take effect 60 days after publication in the Federal Register, and will generally apply to contracts entered into on or after the 241st day after publication in the Federal Register. The Rule has the potential to profoundly impact the way disputes concerning consumer financial products and services are resolved. Thus, today’s action by the CFPB will likely lead to an effort pursuant to the Congressional Review Act to overturn the Rule before it becomes effective.
If you have questions about the rule or other related issues, please visit our Consumer Financial Protection Bureau practice page, or contact a Buckley Sandler attorney with whom you have worked in the past.