The CFPB Strikes Again – Class Action Waivers to be Eliminated? Maybe Not.


untitled (19)The Bad News.By Greg Johnson. At a recent Consumer Financial Protection Bureau field hearing in Denver, the CFPB revealed a proposal to eliminate the use of class action waivers in consumer finance contracts. Many retail installment sales contracts require arbitration for consumer disputes and also contain a waiver against class actions.  This is unfavorable news for dealers, particularly in California, where there has been a recent flood of consumer class action credit litigation and the industry recently obtained a favorable ruling from the California Supreme Court, Sanchez v. Valencia Holding Company, LLC, 353 P.3d 741 (Cal.  2015), holding that arbitration clauses with a class action waiver were valid.

The Good News. The House Financial Services Committee passed  H.R. 1266 by a vote of by 35 to 24, which would replace the CFPB’s sole director with a bipartisan, five-member Commission. The Committee also passed H.R. 957which would create an independent, Senate-confirmed inspector general for the CFPB. This passed 56 to 3.  At present, it is unknown if and when these bills will be considered by the full House. With a change in the structure of the CFPB and legislative oversight, the CFPB’s anti-class action waiver proposal, like many CFBP proposals, would be less likely to gain traction.  Time will tell.

This blog is for informational purposes only. By reading it, no attorney-client relationship is formed. The law is constantly changing and if you want legal advice, please consult an attorney. Gregory J. Johnson ©All rights reserved. 2015.

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