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War over CFPB escalates with legal threats and arbitration demands

Joe Mont | August 2, 2017

The Consumer Financial Protection Bureau’s recent rule banning the use of mandatory arbitration clauses is being leveraged by critics to demand the ouster of Director Richard Cordray.

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. The 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, a CFPB statement explains. The CFPB’s rule restores consumers’ right to file or join group lawsuits. Companies can still... To get the full story, subscribe now.