Consumer Agency Would Bar Mandatory Arbitration In Credit Contracts

The watchdog Consumer Financial Protection Bureau has proposed new rules that would bar financial institutions from forcing checking account and credit customers to sign mandatory arbitration agreements. These contract provisions effectively bar class action lawsuits, a prohibition that industry advocates say allows them to keep costs down, without harming consumers and without lining the pockets of plaintiff lawyers. Consumer advocates maintain these contract clauses provide, in the words of CFPB director Richard Cordray, “a free pass to sidestep the courts and avoid accountability for wrongdoing.”