The new rule is set to take effect 60 days after publication in the Federal Register. It comes more than two years after the bureau studied mandatory arbitration clauses and one year after it proposed to ban such clauses in consumer finance contracts.
A day after House Republicans called for the dismissal of CFPB Director Richard Cordray, the American Financial Services Association called on Congress to reform the bureau’s practices and amend its structure.
A Georgia case proves the wisdom of a periodic review of your dealership’s forms.
The bureau is seeking to ban pre-dispute arbitration clauses that block class action lawsuits. The proposals under consideration would allow companies to use arbitration for individual disputes, but would require those companies to submit to the CFPB the arbitration claims filed and awards issued.
There is much to dislike about the CFPB’s 728-page report on pre-dispute arbitration clauses.
In a report released this week, the regulator revealed that 75% of consumers did not know whether they were subject to an arbitration clause in their agreements with their financial service providers. The study covered six different consumer finance markets, including auto loans.
Automotive Compliance Consultants warned dealers this week to review their arbitration clauses in their finance contracts. The firm says such language is coming under scrutiny from courts and regulators.
A Georgia dealer dodged a legal bullet after management failed to sign a document, but there was no escaping the cost of defending the matter in court.
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