UNITED STATES – On October 24, 2017, the Senate voted 51-50 to nullify a Consumer Financial Protection Bureau (CFPB) regulation that restricted banks and credit card companies from requiring customers to submit to mandatory arbitration in the event of a dispute. Vice President Mike Pence provided the tiebreaking vote. The Senate’s resolution now goes to President Trump, who is expected to sign the resolution into law.
The rule, which was introduced by the CFPB in July but had not yet taken effect, would have restricted financial institutions from including mandatory arbitration clauses in the fine print of its consumer contracts. This restriction on arbitration agreements would have enabled aggrieved consumers to bring class-action lawsuits against financial institutions with increased ease. Mandatory arbitration clauses are commonly utilized in many types of consumer contracts across the financial industry, including credit card agreements and private student loans. As a result of the Senate’s vote, financial institutions will face fewer class-action suits from its consumers.