Small business advisory review panel for potential rulemaking on arbitration agreements
As part of the Consumer Financial Protection Bureau’s efforts to make consumer finance markets work for consumers, and in accordance with specific authority from Congress, the Bureau is examining the role of arbitration agreements in the resolution of consumers’ disputes with providers of consumer financial products and services. Consumers and providers (i.e. the parties) may agree to arbitrate in two ways: they may agree to arbitrate a dispute after it has arisen or they may agree to arbitrate through contracts or clauses in contracts that require the parties to submit any future disputes between them to an arbitrator, rather than to a court. The former are sometimes called “post-dispute arbitration agreements” and the latter are sometimes called “mandatory pre-dispute arbitration agreements” because they commit the parties to arbitration before there is a dispute between them. The proposals under consideration concern mandatory pre-dispute arbitration agreements only, which are typically referred to in this outline more simply as “arbitration agreements.” Arbitration agreements were originally used primarily in contracts between businesses, but in recent decades have become increasingly common in consumers’ contracts with businesses for everyday consumer products, including financial products and services.