Concerned that arbitration agreements block class actions and reduce compliance incentives, the CFPB has issued a final rule addressing “pre-dispute arbitration agreements”, or agreements that provide for arbitration of future disputes. The Rule will apply to consumer credit, consumer deposit accounts, and other consumer financial products and services. The Rule will:
- Require pre-dispute arbitration agreements to include specific language stating that the agreement cannot stop a consumer from filing or being a member of a class action. There is also a limited exception for reloadable prepaid cards under certain conditions.
- Require certain arbitration and court records to be submitted to the CFPB (to be posted online) if you use pre-dispute arbitration agreements after the required compliance date.
There will also be requirements if you enter into an existing pre-dispute arbitration agreement after the required compliance date, if the agreement doesn’t include the specifically required language. The Rule is effective 60 days after publication in the Federal Register. Compliance is required beginning on the 241st day after publication in the Federal Register.