CONSUMER FINANCIAL
PROTECTION BUREAU LAUNCHES PUBLIC INQUIRY INTO ARBITRATION CLAUSES
Today the Consumer
Financial Protection Bureau (CFPB) launched a public inquiry into how consumers
and financial services companies are affected by arbitration and arbitration
clauses.
Consumer Financial Protection Bureau
FOR
IMMEDIATE RELEASE:
April
24, 2012
CONSUMER FINANCIAL
PROTECTION BUREAU LAUNCHES PUBLIC INQUIRY INTO ARBITRATION CLAUSES
Bureau to Explore
Arbitrationâs Effects on Consumers
WASHINGTON,
D.C. â Today
the Consumer Financial Protection Bureau (CFPB) launched a public inquiry into
how consumers and financial services companies are affected by arbitration and
arbitration clauses.
âArbitration
clauses are found in many contracts for consumer financial products,â said CFPB
Director Richard Cordray. âWe want to learn how arbitration clauses affect
consumers, and how effective arbitration is in resolving consumersâ issues.
This inquiry will help the Bureau assess whether rules are needed to protect
consumers.â
Arbitration
is a formal way to resolve disputes outside the court system. Many contracts
for consumer financial services products and services contain a âpre-dispute
arbitration clauseâ stating that the parties generally agree to resolve all
disputes about that product or service through arbitration, rather than through
the court system. Through the Dodd-Frank Act, Congress requires the CFPB to
study the use of pre-dispute arbitration clauses in consumer financial markets
and gives the Bureau the power to issue regulations for the protection of
consumers consistent with the study.
For
purposes of conducting the study, the Bureau is asking the public about:
How consumers and companies are affected by
actual arbitrations; and
How consumers and companies are affected by
arbitration clauses outside of actual arbitrations.
Companies
that use pre-dispute arbitration clauses claim that arbitration is faster and
cheaper than litigation, and at least as fair. Others disagree, noting that
consumers may not realize that they have waived their right to a trial because
of an arbitration clause. And even if consumers understand arbitration clauses,
these clauses may still have significant impacts that warrant study by the
CFPB.
After
the Bureau completes its study, it will assess whether imposing conditions or
prohibitions on arbitration would better protect consumers.
The
Request for Information on Arbitration, as submitted to the Federal Register
for publication, is available at: http://files.consumerfinance.gov/f/201204_cfpb_rfi_predispute-arbitration-agreements.pdf
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