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CFPB Considers Ban on Mandatory Arbitration Clauses

Joe Mont | October 7, 2015

The Consumer Financial Protection Bureau is moving forward with new rules that would prohibit the mandatory arbitration clauses in contracts that banks, credit card companies, and other rely upon to prevent consumers from pursuing lawsuits.

In an announcement on Wednesday, the Bureau announced that it is working on proposed rules that would prevent firms from “sidestepping the legal system, give consumers their day in court, and deter companies from wrongdoing.”

 “Consumers should not be asked to sign away their legal rights when they open a bank account or credit card,” CFPB Director Richard Cordray said in a statement.

Many contracts for consumer financial products and services include arbitration clauses. These clauses typically state that either the company or the consumer can require disputes about that product to be resolved by privately appointed arbitrators) rather than through the court system. Where such a clause exists, either side can generally...

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