Acting in compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau (“CFPB”) has completed their study on the use of arbitration clauses in connection with consumer financial products or services, and is beginning the process of issuing regulations restricting the use of certain arbitration clauses in contracts relating to financial products and services. In their study, the CFPB found that in the consumer finance markets studied very few consumers individually seek relief through arbitration or the federal courts, while millions of consumers are eligible for relief each year through group settlements.
The proposal under consideration would prohibit companies from blocking class action lawsuits through the use of arbitration clauses in their contracts. This would apply to most consumer financial products and services that the CFPB oversees, including credit cards, checking and deposit accounts, prepaid cards, money transfer services, certain auto loans, auto title loans, small dollar or payday loans, private student loans, and installment loans.