The Consumer Financial Protection Bureau (CFPB) is moving forward on plans to ban companies from including arbitration clauses that block class action lawsuits in their consumer financial products contracts.
Should the rule proposal become final, companies that focus on consumer financial products should expect to see a rise in class-action litigation.
The Dodd-Frank Act ordered the CFPB to study the use of arbitration clauses in consumer financial products and authorized the agency to issue regulations consistent with the study’s findings. In March, the CFPB published its findings, which included the conclusion that arbitration clauses restrict consumers’ relief for disputes with financial service providers by allowing companies to block group lawsuits.
Earlier this month, the CFPB outlined several regulatory proposals that it plans to submit to a Small Business Review Panel. This is the first step in the rulemaking process, which will likely take several years to complete. The new rules are also expected to be forward-looking and will not apply to existing contracts.
Most notably, the proposed rules would prohibit class action waivers in contracts for consumer financial products and services, including credit cards, checking and deposit accounts, prepaid cards, money transfer services, certain auto loans, auto title loans, small dollar or payday loans, private student loans, and installment loans. According CFPB Director Richard Cordray, arbitration clauses that block class-action litigation operate as a “free pass that prevents consumers from holding their financial providers directly accountable for the harm they cause when they violate the law.”
In good news for businesses, the CFPB proposals under consideration not to completely ban arbitration clauses. However, such clauses would have to explicitly state that they do not apply to cases filed as class actions unless and until the class certification is denied by the court or the class claims are dismissed in court. In addition, businesses that choose to use arbitration clauses for individual disputes must submit to the CFPB the arbitration claims filed and awards issued. According to the CFPB, the information provided would enable the CFPB to better understand and monitor arbitration cases.
Christopher D. Warren Appointed to NJ Ethics Committee
Scarinci Hollenbeck Partner Christopher D. Warren Named to New Jersey Supreme Court District VI Ethics Committee Little Falls, NJ — September 5, 2025 — Scarinci Hollenbeck, LLC is proud to announce that Christopher D. Warren, Partner, has been appointed to serve on the New Jersey Supreme Court District VI Ethics Committee for the term 2025–2029. Mr. Warren brings more than […]
Scarinci Hollenbeck Awards Inaugural Theodore A. Schwartz Scholarship for Environmental Law
Scarinci Hollenbeck Congratulates Theodore A. Schwartz Scholarship Recipient Adrienne Aiken Little Falls, NJ — July 21, 2025 — Scarinci Hollenbeck, LLC established the Theodore A. Schwartz Scholarship for Environmental Law to recognize the contributions of retired partner Theodore “Ted” Schwartz and support the next generation of environmental lawyers. Adrienne Aiken, the recipient of the 2025 […]
Donald M. Pepe Named GlobeSt. Influencer in Industrial Real Estate
Scarinci Hollenbeck Partner Recognized for Continued Impact on Industrial Real Estate Industry Little Falls, NJ — July 25, 2025 — Scarinci Hollenbeck, LLC Partner Donald “Don” Pepe was recently recognized as a 2025 Influencer in Industrial Real Estate by GlobeSt, a leading commercial real estate publication. The GlobeSt award recognizes the professionals, teams, and companies […]
Scarinci Hollenbeck Expands NYC Real Estate and Litigation Practices ADDING Four Litigators
NYC Real Estate and Litigation Attorney Ryan O. Miller and Team Join Scarinci Hollenbeck, LLC New York City, NY – August 13, 2025 – Scarinci Hollenbeck, LLC has strengthened its Real Estate and Litigation practices with the addition of four New York City-based attorneys. Ryan Miller, who joins as a partner, is well known for […]
Bloomberg Law Podcast Discusses Shaquille O’Neil FTX Settlement With Ron Bienstock
Bloomberg Law Podcast Discusses Shaquille O’Neil FTX Settlement With Ron Bienstock Little Falls, NJ – June 24, 2025 – Scarinci & Hollenbeck, LLC Partner and Chair of the firm’s Intellectual Property and Entertainment & Media departments Ronald S. Bienstock recently joined the Bloomberg Law podcast to discuss Shaquille O’Neal settling a class-action lawsuit over his FTX endorsement. […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
