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CFPB Bans Mandatory Arbitration Agreements

CFPB Bans Mandatory Arbitration Agreements Featured

The Consumer Financial Protection Bureau (CFPB) announced a new rule to ban companies from using mandatory arbitration clauses.
Many consumer financial providers, including buy-here, pay-here dealers, use arbitration clauses in their contracts to prevent consumers from joining together in a class-action lawsuit.
Under the rule, firms can still include arbitration clauses in their contracts. But companies subject to the rule may not use the clauses to stop consumers from being part of a group action.
The rule includes specific language that companies will need to use if they include an arbitration clause in a new contract.
The rule also requires firms to submit certain records to the CFPB, including initial claims and counterclaims, answers to these claims and counterclaims, and awards issued in arbitration. The Bureau will collect correspondence companies receive from arbitration administrators regarding a company’s non-payment of arbitration fees and its failure to follow the arbitrator’s fairness standards.
The materials must be submitted with appropriate redactions of personal information. The Bureau intends to publish these redacted materials on its website beginning in July 2019.

Last modified on Tuesday, 11 July 2017 20:44
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