CRL strongly supports the CFPB’s proposed rule to limit pre-dispute mandatory (forced) arbitration clauses in consumer finance contracts. Forced arbitration is a widespread issue affecting a plethora of financial products and services; it impacts the consumers CRL advocates for and implicates CRL’s mission to eliminate abusive financial practices. CRL applauds the CFPB for its efforts to restore consumers’ ability to band together to protect their rights in class actions as well as increase transparency in the use of forced arbitration in individual cases.
Although the proposed rule is strong, CRL offers the following recommendations for improving the final rule:
- Prohibit forced individual arbitration;
- Require reporting on all uses of forced arbitration (not only where there is an arbitration proceeding);
- Expand the reporting requirements to require all institutions supervised by the CFPB to disclose their arbitration clauses;
- Apply the final rule to contracts and existing arbitration clauses that are modified after the date the rule goes into effect; and
- Expand the rule’s coverage to more financial products and services.