Consumer Agency Rule Would End Class Action Waivers

A proposed rule from the Consumer Financial Protection Bureau would eliminate class action litigation waivers in most financial products and services that the CFPB oversees, including those involving lending, storing, moving or exchanging money. The CFPB is acting under the assumption that it is authorized to implement such a policy under authority granted by the Dodd-Frank Act. This rule would run headlong into the 90-year-old Federal Arbitration Act, which articulates a “liberal policy favoring arbitration,” and it’s unlikely it would survive a Supreme Court challenge, according to Fox Rothschild attorney Brian A. Berkley. He considers such a Supreme Court challenge likely, but in the meantime, he says, there are two options that may allow companies “to thread the needle between CFPB compliance and class action cost protection.”