On July 10, 2017, the Consumer Financial Protection Bureau (“CFPB”) finalized a rule governing arbitration agreements in consumer finance contracts. Most importantly, the new rule prohibits providers of certain consumer financial products and services from including in their contracts arbitration clauses that waive any right to bring class action lawsuits.
Covered providers involved in an arbitration pursuant to a pre-dispute arbitration agreement would also be required to submit specified arbitral records to the CFPB. The rule, if it comes into force, would significantly curtail the current industry practice of requiring arbitration clauses with class action waivers in these types of contracts, which the Supreme Court has ruled are valid in a recent series of cases. The rule should apply to agreements entered into more than 241 days after the rule’s publication, but it remains to be seen whether before this time, Congress will take action to repeal the rule, as certain lawmakers have indicated they want to do.