CFPB Eliminates Class Action Waivers with New Arbitration Rule
On July 10, 2017, the Consumer Financial Protection Bureau (“CFPB”) issued a final rule (“Arbitration Rule”) prohibiting banks, debt servicers, credit card companies, and a wide range of other businesses from using arbitration clauses to bar a consumer from filing a class action lawsuit to resolve any future dispute between the consumer and the consumer financial service provider. The full version of the final rule is available on the CFPB’s website: CFPB Arbitration Agreements Final Rule.
The Arbitration Rule is extremely broad and encompasses virtually any type of consumer financial services provider, including entities that do not lend money or service consumer debt. Notably, in addition to creditors, debt buyers and other entities that directly lend, purchase, or service debt, the new rule applies to entities “participating in consumer credit decisions,” entities “providing services to assist with debt management or debt settlement . . . and [entities] providing products or services represented to remove derogatory information from, or to improve, a person’s credit history, credit record, or credit rating . . . .”
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