Yesterday, the Consumer Financial Protection Bureau conducted a public hearing taking testimony on arbitration. The CFPB is considering issuing rules on arbitration and perhaps considering whether binding pre-dispute mandatory arbitration clauses in consumer contracts should be forbidden or regulated in some way. Many people attended and submitted remarks on arbitration. The CFPB had also been tasked with conducting a study on arbitration clauses and their affects. The first phase of their study was also released yesterday – read it here. The second phase of the report will include their evaluation of testimony taken from public hearings across the country.
Do you know what arbitration is? There was a considerable consensus from the speakers at the hearing yesterday that most consumers do not even know what arbitration means. I have discussed it in previous blog posts. Arbitration is a private resolution process of legal disputes. If a contract to which you are a party has an arbitration clause, by agreeing to the contract, you are waiving your right to a jury trial on any dispute you may have and agreeing to submit your legal dispute to a private arbitration service. Arbitrations are confidential, little choice in choosing an arbitrator, little discovery is permitted and arbitration greatly reduces the value of a case. Appeals from arbitration awards are very limited. Most any contract you sign these days has an arbitration clause.
If you have an opinion on arbitration clauses in consumer contract, you are urged to contact the CFPB to let your view be known.