[JURIST] The Consumer Financial Protection Bureau (CFPB) [official website] announced [press release] a new rule Monday, banning mandatory arbitration clauses in consumer agreements. The CFPB explained that mandatory arbitration agreements can prevent class action lawsuits and perpetuate harmful practices. The new rule will enforce the consumer's right to take part in group lawsuits. The CFPB hopes that the rule will promote more transparency and accountability for large companies. The CFPB will also place additional requirements for documentation and reporting measures for when companies do undergo arbitration.
The CFPB has been part of legal headlines over the last year. In February the New York Attorney General and the CFPB filed a lawsuit [JURIST report] against RD Legal Funding, LLC and founder/owner Roni Dersovitz for allegedly scamming 9/11 first responders and NFL concussion victims out of money intended to cover medical costs, lost income and other critical personal needs. In January the CFPB initiated a suit [JURIST report] against Navient, the largest servicer of US student loans. In September the CFPB announced [JURIST report] a $100 million fine against banking giant Wells Fargo for widespread illegal sales practices.