On August 11, 2016, 18 State Attorneys General filed a letter in support of the Consumer Financial Protection Bureau’s (“CFPB”) proposed rule regarding pre-dispute arbitration clauses in consumer financial products and services contracts. The CFPB’s proposal seeks to prohibit financial services companies from using mandatory arbitration clauses to bar consumers from filing or participating in class actions. The proposal would also require a company—involved in an arbitration with a consumer pursuant to an arbitration clause—to submit specified arbitral records to the CFPB. The proposed rule is expected to take effect next year.
If enacted, the State Attorneys General believe the CFPB’s proposal would “restore significant and much-needed consumer protections that have been eroded through the inclusion by financial services companies of mandatory arbitration clauses in their contracts with consumers.” The Attorneys General letter was spearheaded by Massachusetts; co-sponsored by the states of New York, California, and the District of Columbia; and joined by 14 other states, including Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Mississippi, New Hampshire, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington.
The letter can be accessed here: http://www.mass.gov/ago/docs/consumer/cfpb-multistate-letter.pdf.
The CFPB proposal is available here: http://files.consumerfinance.gov/f/documents/CFPB_Arbitration_Agreements_Notice_of_Proposed_Rulemaking.pdf.