Nearly 13,000 comments have been received by the Consumer Financial Protection Bureau on its proposed set of rules prohibiting arbitration clauses that prevent class action lawsuits. The CFPB published its proposal in the Federal Register on May 24, with a 90-day comment period. All comments were due no later than Monday.

Under the CFPB's proposal, companies would be prohibited from putting mandatory arbitration clauses— which are a way to resolve disputes outside the court system—in new contracts. Many contracts for consumer financial products and services contain such clauses.

Companies would still be able to include arbitration clauses in their contracts. However, for contracts subject to the proposal, the clauses would have to use specific language to explain they cannot be used to stop consumers from being part of a class action in court.

The CFPB would monitor consumer finance arbitrations to ensure consumers are being treated fairly. The bureau also is considering publishing information it would collect in some form, so the public also can monitor the arbitration process.

The CFPB, which has jurisdiction over banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial companies operating in the U.S., believes there are plenty of benefits for consumers.

Companies will be incentivized to comply with the law in order to avoid group lawsuits, and consumers also will get their day in court. It also contends the proposed rules also would make the individual arbitration process, itself, more transparent.

But some argue the proposal still faces a lengthy, uphill battle—one that could potentially stretch beyond Richard Cordray's five-year appointment as CFPB director, which ends in 2018.

"Assuming (Cordray) is even still director by the time they get around to finalizing the rule," Alan Kaplinsky, leader of the Consumer Financial Services Group for the firm Ballard Spahr LLP, told Legal Newsline in June. "He may or may not be."

He continued, "It's not going to be finalized, I don't think, until sometime next year. And then after, there will undoubtedly be a legal challenge in court."

Kaplinsky, an attorney who pioneered the use of pre-dispute arbitration provisions in consumer contracts, has been a vocal opponent of the CFPB's proposed set of rules even before they were officially released by the bureau.

In November, Kaplinsky took issue with a New York Times article that alleged binding arbitration is being used by Wall Street and corporate America to hurt American consumers.

Kaplinsky, who was interviewed numerous times over the span of months by the Times, argued the newspaper omitted key information he provided its reporters regarding class action litigation and the CFPB's study.
He argues class actions only benefit class action lawyers.