Any company that is regulated and examined by the Consumer Financial Protection Bureau (CFPB) knows how expansive the Bureau’s reach is. Despite challenges in the Congress and the courts, the CFPB is not slowing down. On May 5, 2016, the CFPB released a notice of proposed rulemaking that would ban consumer financial companies from using mandatory pre-dispute arbitration clauses in consumer financial contracts (see our more detailed discussion here).
Members of Venable’s CFPB practice group will host a complimentary webinar on June 15, 2016 to discuss the current state of the rulemaking process and outline what your company will need to know about what’s ahead. Sign up to attend the webinar here.
Similar to the framework proposed by the CFPB in October 2015 (see our overview here), there are two major elements to the CFPB’s proposed rule: (1) elimination of agreements blocking consumer participation in class actions; and (2) submission to the CFPB (and potentially public posting) of arbitral claims and awards.
The proposed rule would affect entities covered by the Consumer Financial Protection Act, including providers of consumer financial products and services offering credit cards, checking and deposit accounts, prepaid cards, money transfer services, certain auto loans, short-term small-dollar loans, and private student loans.
The CFPB is seeking comment on the scope of the proposed rule to determine whether certain products or services should not be covered. The comment period will be particularly relevant for those products and services that may be exempted, such as certain forms of payment processing, credit counseling, credit monitoring, and others.