Pre-Dispute Arbitration Agreements

CFPB Proposes Rules to Limit Arbitration Agreements in Consumer Financial ProductsLast week, the CFPB announced two proposals related to the inclusion clauses that require arbitration to resolve all future disputes (“pre-dispute arbitration agreements”) in consumer financial products. The first proposal would effectively ban pre-dispute arbitration agreements that prohibit disputes brought by a class or other group of individuals. The second proposal would require

Can the CFPB Really Prohibit Pre-Dispute Arbitration Agreements?Section 1028 of the Dodd-Frank Act, entitled “Authority to Restrict Mandatory Pre-Dispute Arbitration,” gives the CFPB the authority to promulgate regulations imposing conditions, limitations, or outright prohibitions on mandatory pre-dispute arbitration agreements relating to “consumer financial products or services. However, can Congress truly give the CFPB this authority?

Under Section 1028(a), the CFPB