The Consumer Financial Protection Bureau is investigating the use of arbitration clauses within mortgage lending and other consumer finance documents.
The agency officially rolled out a public inquiry campaign, asking for feedback on how borrowers and financial firms are impacted by arbitration agreements, which essentially function as legal provisions that force parties into arbitration as opposed to litigation when a dispute breaks out.
“Arbitration clauses are found in many contracts for consumer financial products,” said CFPB director Richard Cordray.
“We want to learn how arbitration clauses affect consumers, and how effective arbitration is in resolving consumers’ issues,” he added. “This inquiry will help the Bureau assess whether rules are needed to protect consumers.”
The Dodd-Frank Act outlined guidelines that force the CFPB to study financial firms use of pre-dispute arbitration caluses in consumer documents.
The agency is collecting comments through June 23, 2012. Parties who want to submit feedback can do so by clicking here for more information.
