April 24, 2012

CFPB will begin study of consumer arbitration

By Sarah Cole

It looks like the CFPB will begin its required study of consumer arbitration. From Ballard Spahr:

“The Consumer Financial Protection Bureau announced today that is has initiated its study of consumer arbitration as mandated by Section 1028 of the Dodd-Frank Act. It submitted to the Federal Register for publication a “request for Information Regarding Scope, Methods, and Data Sources for Conducting Study of Pre-Dispute Consumer Arbitration.” The CFPB described the request as “a preliminary step in undertaking the study.”
Section 1028 requires the CFPB to “conduct a study of, and to provide a report to Congress concerning, the use of agreements providing for arbitration of any future dispute between covered persons and consumers in connection with the offering or providing of consumer financial products or services.” Section 1028 goes on to provide that the CFPB “by regulation, may prohibit or impose conditions or limitations on the use of [such] an agreement” if the CFPB “finds that such a prohibition or imposition of conditions or limitations is in the public interest and for the protection of consumers.”
The request asks the public to submit comments on or before June 23, 2012, on four main topics dealing with the scope, methodology, and data sources of the study:
• The prevalence of pre-dispute arbitration agreements in consumer financial services products (other than credit card agreements, on which the CFPB already has data)
• Claims brought by consumers against financial services companies in arbitration
• Claims brought by financial services companies against consumers in arbitration
• The impact of pre-dispute arbitration agreements on consumers outside particular arbitral proceedings
For guidance, the request poses a series of specific questions within each topic. The CFPB may consider soliciting further feedback based upon the information it receives in response to these questions.”

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