January 25, 2023
Although Congress repealed the CFPB’s 2017 final regulation that banned the use of class action waivers in arbitration provisions in customer financial services contracts and required providers to report some information about arbitrations providers had with consumers, the CFPB is back!
On January 11, 2023, when TEAM GRC was focused on helping the Illinois Pawnbrokers Association defeat the APR-cap legislation in that state, the CFPB proposed a “registration” regime for consumer financial services providers whose “contracts” contain arbitration provisions or prohibitions on class actions as a form of action. Waivers of benefits provided by the Military Lending Act or the Servicemembers Civil Relief Act are examples of the waiver provisions that the CFPB has in mind.
The CFPB’s authority allows the Bureau to prescribe rules to collect information from covered persons – here, non-bank providers such as your businesses – to monitor the risks to consumers that these clauses may cause. CFPB also may exercise “supervisory authority” and use “examination” as opposed to administrative subpoenas (civil investigative demands) to investigate…