CFPB Proposes Rule Regulating Pre-Dispute Arbitration Clauses May 17th, 2016Bitcoin, Recent Legal News By Katie McConnell On May 5, 2016, the Consumer Financial Protection Bureau (“CFPB”) issued a proposed rule, which will require providers of certain consumer financial products and services to overhaul their existing consumer-facing agreements. The proposed rule would: Prohibit class action waivers in a wide range of consumer financial products agreements; Require “providers” to insert language into their consumer-facing agreements to inform consumers of their right to participate in class actions; and Require a provider involved in an arbitration claim to timely file with the CFPB information about the claim and how the claim was resolved. What This Means Prospective Effectiveness: The proposed rule will not go into effect until the CFPB has received comments and issued a final rule. After that, the rule, if unchanged, will apply prospectively to any agreements containing pre-dispute arbitration provisions entered into 211 days after the final rule is published in the Federal Register. Scope of Applicability: The proposed rule will apply to “providers” of certain consumer financial products related to lending money, storing money, and moving or exchanging money (including transmitting or exchanging funds and certain other payment processing services). General Purpose Reloadable Prepaid Cards: Providers of these products do not have to remove all cards currently in stores in order to amend their agreements to remove class action waivers and insert the required language. Instead, providers of these products may continue selling packaging that contains non-compliant arbitration agreements if they give consumers a complaint agreement as soon as consumer registers their card. Use of Arbitration: A provider will still be allowed to use a pre-dispute arbitration provision, so long as the provider does not limit a consumer from participating in a class action suit. Required Language: If the provider continues to use pre-dispute arbitration provisions in its consumer financial products agreements (but without including a class action waiver), the provider must include language informing the consumer that the consumer may participate in a class action. Required Disclosure: If the provider uses a pre-dispute arbitration provision in its consumer financial products agreements (but without including a class action waiver) and is involved in a claim subject to arbitration, the provider would be required to file certain information with the CFPB. This could have the effect of limiting the actual use of arbitration, as a certain level of confidentiality will no longer be guaranteed in arbitration proceedings.