On Tuesday, the Senate voted 51-50 (with Vice President Mike Pence casting the tiebreaking vote) to overturn the Consumer Financial Protection Bureau’s July 2017 rule banning firms from including arbitration clauses blocking class-action lawsuits in consumer financial contracts. The Senate’s action follows a 231-190 vote in the House in July 2017 to overturn the Rule. Under the Congressional Review Act, the resolution will now go to President Trump, whose expected signature will invalidate the Rule and prohibit the CFPB from revisiting it for an extended period of time.
Just when you thought that the practical operational restraints imposed by the new Administration had limited (i.e., handcuffed) the Consumer Financial Protection Bureau’s ability to engage in new mischief-making (i.e., new rule-making), today the CFPB issued its arbitration rule.
Last Wednesday, a federal district court in Arizona held that a TCPA plaintiff was compelled to arbitrate his dispute against the holder of his wife’s lease solely because his wife had agreed to an arbitration agreement in connection with the lease.
In Zambrana v. Pressler & Pessler LLP, the Southern District Court of New York stayed a putative class action against various creditors for alleged violations of the Fair Debt Collection Practices Act (FDCPA), referring the matter to arbitration.
What You Need to Know about CFPB’s Proposal to Ban Mandatory Arbitration Clauses in Financial Contracts
On May 5, 2016, the Consumer Financial Protection Bureau (the “CFPB”) published in the Federal Register its 376-page proposed rule to limit the use of mandatory arbitration clauses in certain financial contracts.
Are contractual arbitration clauses harmful to consumers of financial products and services? The CFPB appears to think so. But is the CFPB’s view empirically or legally well-founded?