The Consumer Financial Protection Bureau (CFPB) proposed an amended rule for how financial companies and some other entities include mandatory arbitration clauses in their agreements. The CFPB released a proposed rule that would prevent financial companies from including provisions in their agreements that strip the consumer's right to a class-action suit. These provisions, sometimes labeled 'pre-dispute arbitration agreements,' require consumers to settle their dispute through arbitration. With no right to a trial or class-action lawsuit, consumers must follow and accept the results of an arbitration.
Arbitration is a legal process that is attractive for its low costs and expediency. With no need for court dates and costs, jury selection, a lengthy trial or appeal after appeal, - arbitration instead is structured with a small panel that acts like a jury and their decision is often permanent. Some individuals avoid this option due to the binding nature of this resolution method, and the possible outcome of a small settlement. However, many credit card companies and financial service entities require their members and users to agree to arbitration-only terms. The CFPB hopes to change that by proposing companies include a new clause in their agreements:
“We agree that neither we nor anyone else will use this agreement to stop you from being part of a class action case in court. You may file a class action in court or you may be a member of a class action even if you do not file it.”