Battle Emerges Over Arbitration Clauses in Business Contracts with Consumers
Many are concerned about the new arbitration rule issued by the Consumer Financial Protection Bureau, which is set to go into effect in September. The rule would prohibit consumers from agreeing to use arbitration to remedy any disputes they have with credit card companies and banks. As a result, in July, the U.S. Senate Committee on Banking, Housing, and Urban Affairs announced that it will file a Congressional Review Act Joint Resolution of Approval in the Senate, disapproving of the rule. Florida Senator Marco Rubio is one of the original co-sponsors of the resolution expressing disapproval. Arbitration Clauses in Consumer Contracts Banks and other financial firms typically include language in consumer contracts blocking individuals from filing class action lawsuits and instead funneling any disputes over credit cards and similar accounts into private arbitration. In this context, arbitration tends to be more cost-efficient and often deters people from filing frivolous lawsuits against credit card and banking companies. However, if the rule goes into effect, it will allow class action lawsuits against these companies to be filed, enabling additional group lawsuits. Criticism Many are concerned that the Consumer Financial Protection Bureau has gone too far and is effectively engaging in lawmaking without involving Congress or oversight from the executive branch. In addition, a study put out by the Bureau in 2015 arguably found that arbitration can be beneficial to consumers; that it can be a fair and successful way of resolving disputes; whereby regulatory efforts to limit its use could actually leave consumers worse off. The regulation could also allegedly have the unintended effect of increasing obstacles for new fintech and peer-to-peer lending startups. Congress now has the option of using the Congressional Review Act to block the rule from going into effect. Under the Act, Congress has the option to rescind the rule with the majority vote within 60 legislative days after an agency has submitted the rule to Congress. Some have also suggested that there is an additional method available to kill the rule: The Trump administration could unilaterally strike it down under the justification that it threatens the safety and soundness of lenders. This is because the same Dodd-Frank law that created the Consumer Financial Protection Bureau also provides the Financial Stability Oversight Council with the ability to set aside any rule issued by the Bureau which endangers the stability of the financial system. Attorneys Working To Protect Corporate Employers and Businesses If you are a business owner and have questions concerning legal matters with regards to your business or corporation, contact us today to find out how we can help. At HD Law Partners, our Florida business and corporate law attorneys have over 40 years’ combined experience in representing clients who own a variety of types and sizes of businesses. We are strong corporate advocates, working aggressively to ensure that your company’s interests are protected. Resources: banking.senate.gov/public/index.cfm/republican-press-releases?ID=6BDC6262-6C31-42FB-9794-21941FA3683E thehill.com/blogs/pundits-blog/finance/342800-warrens-consumer-financial-protection-bureau-setting-dangerous Tags: Florida Business and Corporate Lawyer, Florida Business and Corporate Lawyers, Tampa Business Lawyers Posted in Business Corporate | No Comments » Connect with us Archives May 2026 April 2026 March 2026 February 2026 January 2026 December 2025 November 2025 October 2025 September 2025 July 2025 June 2025 January 2025 January 2024 December 2023 November 2023 October 2023 September 2023 August 2023 July 2023 June 2023 May 2023 April 2023 March 2023 February 2023 January 2023 December 2022 November 2022 October 2022 September 2022 August 2022 July 2022 May 2022 April 2022 March 2022 November 2021 October 2021 September 2021 August 2021 July 2021 May 2021 April 2021 March 2021 February 2021 January 2021 December 2020 November 2020 October 2020 August 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 January 2020 December 2019 November 2019 October 2019 September 2019 August 2019 July 2019 June 2019 May 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 November 13 Categories Alimony Appellate Arbitration Auto Accidents Auto Insurance Business Corporate Business Insurance Law Child Custody Child Support Criminal Law Divorce Family Law FEMA Insurance Payments Florida’s Mandatory 2‑Hour Legal Professionalism CLE: Foreclosure Defense Fort Myers Hurricane Insurance Attorney General Guardianship HD Law Partners Service HOA/Property Management Homeowners Association Homeowners Insurance Hurricane Claims Hurricane Insurance Insurance Bad Faith Insurance Claims Insurance Defense Insurance Litigation Landlord Tenant Law Enforcement Liability Loan Modifications Mold Water Damage Parental Rights Paternity Personal Injury Premises Liability Law Prenuptial Agreements Private Security Property Distribution Property Owner Law Sarasota Insurance Litigation Attorney Slip Fall Tampa Business and Corporate Attorneys tampa family attorney Tampa Insurance Attorneys Timeshare Timesharing Uncategorized HD Law Partners is proud to be your trusted full-service law firm Quick Links Property & Casualty Business & Corporate Litigation Family Law Contact Us Careers Get In Touch 2002 North Lois Avenue Suite 510 Tampa, FL 33607 813-253-5333 Contact Us