Rule Would Not Apply To Consumer Sectors Outside Bailiwick Of Consumer Financial Protection Bureau
Jessica Silver-Greenberg and Michael Corkery, who have reported recently in the NYT about how arbitration clauses are spreading throughout consumer contracts, now report in the May 5, 2016 online edition of the NYT, that the Consumer Financial Protection Bureau will seek new rules to prevent lenders from forcing people to agree to mandatory arbitration clauses that bar class actions – a move that could be accomplished without Congressional action.
Vigorous opposition can be expected from the U.S. Chamber of Commerce and lenders, as well as other businesses that want mandatory arbitration clauses.
The rule can only apply to consumer financial companies the agency regulates, Therefore, “[i]t would not apply to arbitration clauses tucked into contracts for cellphone service, car rentals, nursing homes or employment.”
Recall the key case that opened up the widespread use of arbitration clauses in consumer contracts is AT&T Mobility v. Concepcion, 563 U.S. 333 (2011), and the rule would not affect cell phone companies.