This story appeared in Bank Digest.
The Consumer Financial Protection Bureau has adopted a rule banning mandatory predispute arbitration clauses in specified consumer financial product and service contracts if those clauses prevent class actions, although the rule provides a limited number of exemptions. Arbitration clauses generally will be allowed only if their application is restricted to individual claims. The rule also imposes information reporting duties and disclosure obligations on financial services companies that choose to use permissible arbitration clauses.
The rule will apply to all contracts signed 241 days after it is published in the Federal Register. There is a separate mandatory compliance date for contracts related to prepackaged general purpose reloadable prepaid cards.