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Regulatory Advocacy Alert: CFPB’s Proposed Rule Would Eliminate Arbitration Clauses

August 22 is the deadline for comment letters regarding the Consumer Financial Protection Bureau’s (CFPB) proposed arbitration rule. The proposed rule would eliminate arbitration clauses that are routinely included in many contracts for consumer financial products. These arbitration clauses can protect credit unions from class action lawsuits when requiring arbitration as an alternative dispute resolution process.

Under the proposed rule, financial institutions could still include arbitration clauses for individual disputes, but not for class action lawsuits. The CFPB would provide specific language that must be used in the contract. The proposal also requires companies that use arbitration clauses to submit claims, awards and other related materials to the CFPB for monitoring.

The Heartland Credit Union Association (HCUA), along with the Credit Union National Association, has concerns with the proposed rule, in that it may force credit union members to bypass an efficient, cost-effective dispute resolution process. HCUA will submit a comment letter on behalf of member credit unions that outlines these concerns. Kansas and Missouri credit unions are urged to send comment letters as well.

Take Action

Credit unions are encouraged to use PowerComment to submit a comment letter. The deadline is August 22. Visit CUNA's website for additional information on the arbitration clause proposal.

If you have specific questions about this regulatory advocacy issue, please contact Amy McLard, 314.542.1370.