Acting on powers it received in the Dodd-Frank Act, the Consumer Financial Protection Bureau has opened the public comment period to gather views regarding the use of arbitration agreements “in connection with the offering or providing of consumer financial products or services.”
The CFPB seeks comments by June 23, 2012, regarding
- the prevalence of arbitration clauses in consumer financial products and services;
- the types of claims brought by and against consumers in the financial services context;
- the effects on consumers and financial services companies of actual arbitrations; and
- how arbitration clauses affect consumers and financial services companies outside of arbitration.
The timing of this comment and rulemaking process is particularly interesting in light of recent Supreme Court decisions reaffirming the scope of the Federal Arbitration Act and the enforceability of arbitration agreements in business transactions. As widely reported last year, in ATT Mobility LLC v. Concepcion, the Supreme Court held that arbitration clauses are enforceable in consumer contracts even when prohibiting class actions. (For more on Concepcion, see here and here). And earlier this year, in Greenwood, the Supreme Court held that because the law at issue (the Credit Repair Organizations Act) was silent on whether claims can proceed in arbitration, the Federal Arbitration Act required that the arbitration clauses in the challenged consumer contracts be enforced according to their terms.
The call for comments by the CFPB is an early step in a long process of reviewing the issue of arbitration clauses in financial services contracts, but those interested should be sure to let their views be known. Stay tuned and watch this space for updates on the public comment process, as well as the resulting reports and rules issued by the CFPB.