In May 2016, the Consumer Financial Protection Bureau (CFPB) released for public comment a proposed rule to regulate two aspects of consumer financial service arbitration. First, the CFPB proposed to bar consumer financial services companies (as defined in the proposed regulations) from including class action waivers in their customer agreements. Second, the CFPB proposed to require consumer financial services companies to report to the CFPB regarding the use and outcomes of arbitrations conducted pursuant to mandatory pre-dispute arbitration clauses in agreements with their consumers. The CFPB would then publish some of the data.
The ABA Section of Dispute Resolution recently filed a comment letter on the rule proposal, but confined its comments to the second aspect of the proposal (the reporting and publication requirements). (The Section declined to comment on the proposed ban on class action waivers.)
In that letter, the Section strongly supports the proposed reporting requirements. Here is the penultimate paragraph of the letter (on page 2):
The Section strongly supports the CFPB’s Arbitration Reporting Proposal, which would require the reporting of arbitration claim filings, pre-dispute arbitration agreements, awards, and communications regarding compliance with fairness principles and payment requirements, and to make such information public after appropriate aggregation or redaction. As set forth below, the experience of quasi-public dispute resolution organizations, private organizations, and states with the collection and publication of arbitration-related information demonstrates the value of this practice and suggests specific information that should be disclosed. Indeed, the reporting and publication proposed by the CFPB—and the consequent availability of the information for those participating in consumer arbitration, those researching consumer arbitration, and those overseeing consumer arbitration—will help to protect the integrity of arbitration and, by extension, the integrity of the strong federal policy in favor of arbitration that has been expressed by the Supreme Court.
Read here the 15-page, well-reasoned letter for the details of the Section’s support of the reporting requirement.