The Bureau of Consumer Financial Protection (the “CFPB”) has issued a Notice of Proposed Rulemaking (the “NPRM”) that, if adopted, will have two primary effects on the providers of certain consumer financial products and services that use arbitration clauses in their consumer contracts.
Products and services that would be subject to the proposed rule include not only those offered by banks and other financial institutions, but also certain telecommunications carrier products and services and motor vehicle sales and leasing financings.
First, the Proposed Rule would prevent providers from relying on pre-dispute arbitration agreements to obstruct a class action suit that is brought in relation to the provision of consumer financial services or products, and would require providers to include specific language in their customer contracts recognizing the customer’s right to bring or participate in such lawsuits.
Second, the Proposed Rule would require providers to submit documentation to the CFPB pertaining to their arbitration claims and communications with arbitration administrators.
Norton Rose Fulbright attorneys Susan L. Ross, Kathleen A. Scott and Caleb Segrest have written a legal update that discusses the proposed rule and its possible consequences.