CFPB targets class action waivers

Author: Tom Young | Published: 27 Oct 2015

The US Consumer Financial Protection Bureau’s (CFPB) consideration of proposals to ban arbitration clauses in consumer financial contracts has caused some counsel to question the CFPB’s rationale.

Arbitration clauses appear in contracts for consumer financial products such as bank accounts or credit cards. The clauses, also known as class-action waivers, block consumers from bringing future claims through class-action arbitration.

The 2010 Dodd-Frank Act mandated the CFPB to study such clauses, and required the Bureau to report its findings to Congress in a report. That report was delivered in March. Now, the CFPB is claiming a ban on class action waivers will help consumers.

Some counsel are raising questions over the report’s limitations, the CFPB’s use of authority and the implied value of class-action litigation itself.

KEY TAKEAWAYS

The Consumer Financial Protection Bureau (CFPB) is considering proposals to ban arbitration clauses in consumer financial contracts;The 2010 Dodd-Frank...