A Modest Proposal? CFPB to Gut Arbitration in Consumer Financial Contracts
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- The CFPB released its long-feared proposed rule prohibiting most providers of consumer financial products and services from including in their consumer agreements an arbitration clause that bars consumers from filing or participating in a class action.
- If finalized as proposed, the rule would be a seismic change for a broad range of companies providing covered financial products and services, increasing their legal costs and reputational risks.
- Although the rule is likely to be the subject of litigation, providers of covered consumer financial products and services will need to consider the costs and benefits of arbitration going forward for resolution of individual consumer disputes.