On May 5, 2016, in a widely anticipated move, the Consumer Financial Protection Bureau (CFPB) proposed a rule that would prohibit certain consumer financial services and products providers (providers) from relying on mandatory arbitration clauses in order to block consumers from filing or participating in a class action against them. Essentially, CFPB’s proposed rule would remove providers from the protections of the Federal Arbitration Act (FAA) and the US Supreme Court’s ruling in AT&T Mobility v. Concepcion, 563 U.S. 333 (2011), which held that arbitration clauses containing class action waivers are enforceable in consumer contracts.
If finalized in its proposed form, CFPB’s rule will have an enormous impact on the state of consumer financial services litigation and lead to a dramatic increase in the number of class action filings against providers.
