• CFPB Issues Final Consumer Arbitration Rule
  • August 24, 2017 | Authors: Marjorie A. Corwin; Robert A. Gaumont; Christopher R. Rahl
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • On July 10, 2017, the Consumer Financial Protection Bureau (CFPB) released its final consumer arbitration rule. The final rule largely follows the CFPB’s May 24, 2016 proposed arbitration rule by prohibiting the inclusion of class action waivers in most consumer arbitration agreements. Arbitration agreements can still be used by financial institutions and other covered businesses, but consumers can no longer be required to give up the right to bring or participate in a class action lawsuit. The rule also requires the inclusion in consumer arbitration agreements of a specific disclosure concerning class action rights and additional disclosures are required where a consumer arbitration agreement applies to multiple products/services and only some of the products/services are subject to the CFPB’s final rule. The final rule takes effect on August 10, 2017, but will only apply to consumer arbitration agreements entered into (and new products/services obtained) 180 days after the effective date (February 10, 2018). There is significant industry and legislative opposition to the final rule. On July 25, 2017, the United States House of Representatives voted to repeal the CFPB’s rule and prohibit implementation of a similar rule in the future. The repeal resolution now moves to the United States Senate. Unless implementation of the final rule is blocked, financial institutions and other covered businesses that currently include an arbitration agreement in their consumer agreements will need to evaluate whether they want to continue to use arbitration as the default dispute resolution method without the ability to cut off class action lawsuits and, if so, will need to adjust the terms of their agreements to comply with the rule and include required disclosures. If you would like more information concerning the CFPB’s final arbitration rule, please contact Christopher Rahl.