The Consumer Financial Protection Bureau (CFPB) announced today that it will study the impact of forced arbitration in consumer financial services contracts, as required by the Dodd-Frank Act passed in 2010. The CFPB is seeking public comments by June 23, 2012.
A 2009 Public Citizen Report Forced Arbitration: Unfair and Everywhere, co-authored and researched by the Fair Contracts Project’s Reform Team Member Zachary Gima, found that consumers are harmed by the “ubiquitous” use of forced arbitration in many industries. Forced arbitration clauses found in the fine print can deprive consumers of their right to go to court over disputes and to hold corporations accountable for misconduct.
The CFPB has broad power to condition or even ban the use of forced arbitration in contracts they regulate.