The federal Consumer Financial Protection Bureau (CFPB) has arrayed itself as a counterforce to recent judicial branch decisions that have had the effect of channeling more litigation into arbitration and making it more difficult to adjudicate broad violations as class actions. The CFPB has announced that it will be undertaking a “public inquiry” into whether mandatory arbitration clauses adversely affect consumers’ ability to seek remedies for violations of consumer protection laws and statutes.
The CFPB public inquiry will consist of soliciting consumer input as to the prevalence of mandatory arbitration clauses and how consumers are affected by them. In seeking broad public input, the CFPB follows a largely unprecedented model among federal agencies. Any proposed regulations concerning mandatory arbitration that grow out of the public inquiry will also be subject to public comment, as have other proposed CFPB regulations. See, e.g., http://www.consumerfinance.gov/regulations/. The relative authority of CFPB regulations with regard to U.S. Supreme Court decisions such as AT&T Mobility v. Concepcion (which endorsed adhesive arbitration clauses and class action waivers virtually without qualification) has yet to be tested.
Founded in 2011, the CFPB is the newest executive branch agency. See
http://www.consumerfinance.gov/the-bureau/ (describing CFPB mission as follows: “[T]o make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.” First headed by former Harvard Law School Professor, now U.S. Senate candidate, Elizabeth Warren, the CFBP’s current Director is Richard Cordray, who remarked that “We want to learn how arbitration clauses affect consumers, and how effective arbitration is in resolving consumers’ issues. This inquiry will help the bureau assess whether rules are needed to protect consumers.” The Dodd-Frank Act authorized and created the CFPB, and invests it with the authority to both study arbitration clauses in consumer financial products and to issue regulations to protect consumers based on the findings derived from the study.