CFPB Schedules Arbitration Hearing for May 5, Proposed Rule to Come?
The CFPB has scheduled a field hearing on arbitration clauses in Albuquerque, N.M., on May 5 at 11 a.m., MDT. Experts are anticipating the hearing will be the forum for the bureau to release its proposed rule on arbitration, and industry groups are bracing for restrictions or an outright ban on arbitration clauses in financial services contracts.
Last October the CFPB held a field hearing on arbitration in Denver, before which it announced it was considering proposing rules that would restrict consumer financial companies from using certain types of arbitration clauses that block consumers from forming class action lawsuits to obtain compensation. Under one proposal, the bureau explicitly would provide that the arbitration agreement would be inapplicable to cases filed in court on behalf of a class unless class certification is denied or the class claims are dismissed.
In March of 2015, the bureau released its 728-page “Arbitration Study: Report to Congress 2015” report, which a Mercatus Center working paper later criticized for its methodology. UVA Law Professor Jason Scott Johnson and George Mason University Law Professor Todd Zywicki made the case that the CFPB’s report doesn’t provide much of the key information necessary to fully evaluate the relative roles of arbitration and class actions as dispute resolution mechanisms for consumers.