CFPB Issues Spring 2016 Rulemaking Agenda

On May 18, the CFPB released an overview of its Spring 2016 Rulemaking Agenda, which outlines the CFPB’s current initiatives. In addition to summarizing the CFPB’s recently released proposed rule to ban pre-dispute arbitration clauses in future consumer agreements, the agenda states that the CFPB expects to release this Summer (i) a Notice of Proposed Rulemaking regarding small dollar loan products, including payday loans and auto title loan; (ii) a rule to finalize its November 2014 proposed rule on prepaid products; (iii) a Notice of Proposed Rulemaking to provide clarity concerning its TRID Know Before You Owe mortgage rule; and (iv) a final rule to amend its 2014 proposed rule revising certain provisions of mortgage servicing requirements under RESPA and TILA. The agenda further comments on the CFPB’s oversight of (i) overdraft services on checking accounts, noting that the agency “is engaged in pre-rule making activities to consider potential regulation” of such services;  (ii) debt collection practices, observing that the agency is in the process of developing proposed rules to further regulate the industry; (iii) nonbank institutions, emphasizing the CFPB’s rulemaking efforts to further define larger participants of certain markets for consumer financial products and services; and (iv) mortgage markets, highlighting CFPB efforts to implement “critical consumer protections under the Dodd-Frank Act.” Finally, the agenda comments that the CFPB is in the “very early stages starting work to implement section 1071 of the Dodd-Frank Act, which amends the Equal Credit Opportunity Act to require financial institutions to report information concerning credit applications made by women-owned, minority-owned, and small businesses.”

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CFPB Issues Proposed Rule Seeking to Prohibit Mandatory Arbitration Clauses

On May 5, the CFPB released a highly anticipated proposed rule that would ban covered providers of most financial consumer products and services from including mandatory pre-dispute arbitration clauses in future consumer agreements. In addition, the proposed rule would require a covered provider involved in arbitration pursuant to a pre-dispute arbitration agreement to submit specified arbitral records to the CFPB. Following its March 2015 Arbitration Study, the CFPB asserts that the proposed rule would (i) protect consumers’ right to seek justice and relief in court; (ii) deter companies from violating the law, claiming “attention on the practices of one company can affect or influence their business practices and the business practices of other companies more broadly”; and (iii) increase transparency by requiring companies that use arbitration clauses to submit to the CFPB any claims filed or awards issued in arbitration.  Read more…

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CFPB to Host Field Hearing on Arbitration

On May 5, the CFPB will host a field hearing on arbitration in Albuquerque, New Mexico. Last October, the CFPB assembled its Small Business Review Panel to review proposals to limit pre-dispute arbitration agreements for consumer financial products and services, signaling preliminary stages of the anticipated proposed rulemaking. The May 5 hearing will be the CFPB’s third field hearing on arbitration; the first was in March 2015 and the second in October 2015.

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Seventh Circuit Finds No Enforceable Arbitration Agreement Case Involving Chicago-Based Credit Reporting Company

Recently, the U.S. Court of Appeals for the Seventh Circuit issued an opinion affirming a district court’s denial of a credit reporting company’s motion to compel arbitration in a putative class action. The Seventh Circuit considered whether a particular online process was sufficient to form a contract between the company and its customer. Sgourros v. TransUnion Corp., No. 15-1371 (7th Cir. Mar. 25, 2016). The plaintiff in the case purchased a credit score report from the company that he alleged was inaccurate — it was 100 points higher than a lender’s report — and therefore he alleged that the report was useless. The plaintiff sued the company under various state and federal consumer protection laws. The company sought to compel arbitration, arguing that the plaintiff had agreed to the terms of a service agreement that included a mandatory arbitration clause because he clicked on various acceptance buttons in the online ordering process. Read more…

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CFPB Releases Fact Sheet: Policy Priorities over the Next Two Years

On February 25, the CFPB released a fact sheet outlining its policy priorities over the next two years. The document lists the following nine near-term priority goals: (i) arbitration; (ii) consumer reporting; (iii) debt collection; (iv) demand side consumer behavior; (v) household balance sheets; (vi) mortgages; (vii) open-use credit; (viii) small business lending; and (ix) student lending. Regarding arbitration, the CFPB noted that it “will continue the rulemaking process and propose a rule consistent with its study that will further enable consumers to effectuate their rights and hold institutions accountable for unlawful conduct.” With respect to consumer reporting, the CFPB will focus on issues surrounding the accuracy of consumer reporting and institutions’ dispute resolution processes. In the debt collection space, the CFPB plans to initiate rulemakings on debt collector conduct (including issues relating to the substantiation of consumer debt and the disclosure of information to consumers) while simultaneously pursuing rigorous supervision and enforcement activity to ensure industry compliance. Read more…

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