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GOP turns to Congressional Review Act for killing arbitration rule

Joe Mont | July 12, 2017

Within hours of the Consumer Financial Protection Bureau announcing a new rule limiting the use of arbitration agreements, moves are afoot to kill it.

Many consumer financial products like credit cards and bank accounts have arbitration clauses in their contracts that prevent consumers from filing class-action lawsuits and require the use of arbitration.

Mandatory arbitration clauses typically state that either the company or the consumer can require that disputes between them be resolved by privately appointed individuals (arbitrators) except for individual cases brought in small claims court. While these clauses can block any lawsuit, companies almost exclusively use them to block class action lawsuits.

The CFPB rule would ban contractual language that prohibits consumer lawsuits and demands arbitration to resolve any disputes.

The Dodd-Frank Act...

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