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House votes to nix CFPB’s arbitration ban

Joe Mont | July 26, 2017

The House of Representatives has voted to repeal the Consumer Financial Protection Bureau’s ban on mandatory arbitration agreements. The Republican-led effort now moves onto Senate deliberations.

Mandatory arbitration clauses typically state that either the company or the consumer can require that disputes between them be resolved by privately appointed arbitrators, except for individual cases brought in small claims court.

The Dodd-Frank Act required the CFPB to study the use of mandatory arbitration clauses in consumer financial markets. Congress also authorized the Bureau to issue regulations based on findings that are consistent with the Bureau’s study of arbitration.

The CFPB’s subsequent rule, finalized earlier this month, restores consumers’ right to file or join group lawsuits. Companies can still include arbitration clauses in their contracts, but may not use... To get the full story, subscribe now.