Second Study on Consumer Arbitration Completed

The Consumer Finance Protection Bureau (CFPB) has completed its second study of consumer arbitration for Congress. A study was required under the Dodd Frank Act before regulations could be imposed by the CFPB on pre-dispute arbitration agreements in covered products, generally consumer financial products and services. The CFPB has authority to ban or regulate if "it is in the public interest and for the protection of consumers." It seems to have concluded that measures need to be taken—whether that will be a complete ban on pre-dispute arbitration agreements or a ban on class action waivers or some other remedy remains to be seen.

Bloomberg, in an article titled CFPB Finds Arbitration Harms Consumers in Study Presaging Rules, reports the head of the Consumer Financial Protection Bureau saying in a press release on March 10:

These arbitration clauses restrict consumer relief in disputes with financial companies by limiting class actions that provide millions of dollars in redress each year,” Richard Cordray, the CFPB’s director, said in an e-mailed statement. “Now that our study has been completed, we will consider what next steps are appropriate.

The CFPB held public hearings in Newark, New Jersey on March 10, 2015.

Keywords: alternative dispute resolution, litigation, arbitration, CFPB, consumer, class action

_{Edna Sussman is with Sussman ADR LLC in New York, New York.}

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