In an recent development, a coalition of consumer advocacy organizations lodged a Petition for Rulemaking with the Consumer Financial Protection Bureau (CFPB) to push for the prohibition of pre-dispute arbitration clauses in consumer contracts.
These clauses typically restrict consumers to arbitration instead of litigation when disputes arise. The consumer groups assert such clauses work in the favor of corporations, denying consumers the choice of seeking redressal through the court system.
The Petition proposes that consumers should be able to choose between arbitration and litigation, but only after a dispute has become apparent. By advocating for post-dispute choices, the groups hope to provide consumers with more power to decide on the ideal course of action for their situation.
Despite this, several compelling arguments have been presented about why such rulemaking might not be conducive. These range from the economic impact on businesses to the potential of overwhelming the court system with cases that could have been resolved through arbitration. As such, it remains to be seen how the CFPB will respond to this Petition.