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Bureau of Consumer Financial Protection Vol. 81 Tuesday, No. 100 May 24, 2016 Part II Bureau of Consumer Financial Protection 12 CFR Part 1040 Arbitration Agreements; Proposed Rule VerDate Sep<11>2014 18:00 May 23, 2016 Jkt 238001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\24MYP2.SGM 24MYP2 mstockstill on DSK3G9T082PROD with PROPOSALS2 32830 Federal Register / Vol. 81, No. 100 / Tuesday, May 24, 2016 / Proposed Rules BUREAU OF CONSUMER FINANCIAL Number (RIN) for this rulemaking. authorized the Bureau, after completing PROTECTION Because paper mail in the Washington, the Study (hereinafter Study), to issue DC area and at the Bureau is subject to regulations restricting or prohibiting the 12 CFR Part 1040 delay, commenters are encouraged to use of arbitration agreements if the [Docket No. CFPB–2016–0020] submit comments electronically. In Bureau found that such rules would be general, all comments received will be in the public interest and for the RIN 3170–AA51 posted without change to http:// protection of consumers.3 Congress also www.regulations.gov. In addition, required that the findings in any such Arbitration Agreements comments will be available for public rule be consistent with the Bureau’s AGENCY: Bureau of Consumer Financial inspection and copying at 1275 First Study.4 Protection. Street NE., Washington, DC 20002, on In accordance with this authority, the official business days between the hours ACTION: Proposed rule with request for Bureau is now issuing this proposal and public comment. of 10 a.m. and 5 p.m. eastern time. You request for public comment. The can make an appointment to inspect the proposed rule would impose two sets of SUMMARY: Pursuant to section 1028(b) of documents by telephoning (202) 435– limitations on the use of pre-dispute the Dodd-Frank Wall Street Reform and 7275. arbitration agreements by covered Consumer Protection Act (Pub. L. 111– All comments, including attachments providers of consumer financial 203), the Bureau of Consumer Financial and other supporting materials, will products and services. First, it would Protection (Bureau) is proposing to become part of the public record and prohibit providers from using a pre- establish 12 CFR part 1040, which subject to public disclosure. Sensitive dispute arbitration agreement to block would contain regulations governing personal information, such as account consumer class actions in court and two aspects of consumer finance dispute numbers or Social Security numbers, would require providers to insert resolution. First, the proposed rule should not be included. Comments language into their arbitration would prohibit covered providers of generally will not be edited to remove agreements reflecting this limitation. certain consumer financial products and any identifying or contact information. This proposal is based on the Bureau’s services from using an agreement with FOR FURTHER INFORMATION CONTACT: preliminary findings—which are a consumer that provides for arbitration Owen Bonheimer, Benjamin Cady, consistent with the Study—that pre- of any future dispute between the Lawrence Lee, Nora Rigby, Counsels; dispute arbitration agreements are being parties to bar the consumer from filing Eric Goldberg, Senior Counsel, Office of widely used to prevent consumers from or participating in a class action with Regulations, Consumer Financial seeking relief from legal violations on a respect to the covered consumer Protection Bureau, at 202–435–7700. class basis, and that consumers rarely financial product or service. Second, the SUPPLEMENTARY INFORMATION: file individual lawsuits or arbitration proposal would require a covered I. Summary of the Proposed Rule cases to obtain such relief. provider that is involved in an Second, the proposal would require arbitration pursuant to a pre-dispute The Bureau of Consumer Financial providers that use pre-dispute arbitration agreement to submit Protection (Bureau) is proposing arbitration agreements to submit certain specified arbitral records to the Bureau. regulations governing agreements that records relating to arbitral proceedings The Bureau proposes that the provide for the arbitration of any future to the Bureau. The Bureau intends to disputes between consumers and rulemaking would apply to certain use the information it collects to providers of certain consumer financial consumer financial products and continue monitoring arbitral products and services. Congress services. The Bureau is also proposing proceedings to determine whether there directed the Bureau to study these pre- to adopt official interpretations to the are developments that raise consumer dispute arbitration agreements in the proposed regulation. protection concerns that may warrant Dodd-Frank Wall Street Reform and further Bureau action. The Bureau DATES: Comments must be received on Consumer Protection Act (Dodd-Frank intends to publish these materials on its or before August 22, 2016. or Dodd-Frank Act).1 In 2015, the Web site in some form, with appropriate ADDRESSES: You may submit comments, Bureau published and delivered to redactions or aggregation as warranted, identified by Docket No. CFPB–2016– Congress a study of arbitration.2 In the to provide greater transparency into the 0020 or RIN 3170–AA51, by any of the Dodd-Frank Act, Congress also following methods: arbitration of consumer disputes. • Email: FederalRegisterComments@ 1 Public Law 111–203, 124 Stat. 1376 (2010), The proposal would apply to cfpb.gov. Include Docket No. CFPB– section 1028(a). providers of certain consumer financial 2016–0020 or RIN 3170–AA51 in the 2 Bureau of Consumer Fin. Prot., Arbitration products and services in the core subject line of the email. Study: Report to Congress, Pursuant to Dodd-Frank consumer financial markets of lending • Wall Street Reform and Consumer Protection Act money, storing money, and moving or Electronic: http:// § 1028(a) (2015), available at http:// www.regulations.gov. Follow the files.consumerfinance.gov/f/201503_cfpb_ exchanging money, including most instructions for submitting comments. arbitration-study-report-to-congress-2015.pdf. providers that are engaged in: • Mail: Monica Jackson, Office of the Specific portions of the Study are cited in this • Extending or regularly participating proposal where relevant, and the entire Study will Executive Secretary, Consumer be included in the docket for this rulemaking at in decisions regarding consumer credit Financial Protection Bureau, 1700 G www.regulations.gov. See Bureau of Consumer Fin. under Regulation B implementing the Street NW., Washington, DC 20552. Prot., Request for Information Regarding Scope, Equal Credit Opportunity Act (ECOA), • Hand Delivery/Courier: Monica Methods and Data Sources for Conducting Study of engaging primarily in the business of Pre-Dispute Arbitration Agreements, 77 FR 25148 Jackson, Office of the Executive (Apr. 27, 2012) (hereinafter Arbitration Study RFI). providing referrals or selecting creditors Secretary, Consumer Financial Before releasing the Study, the Bureau released for consumers to obtain such credit, and Protection Bureau, 1275 First Street NE., preliminary results in late 2013. Bureau of the acquiring, purchasing, selling, or Washington, DC 20002. Consumer Fin. Prot., Arbitration Study Preliminary servicing of such credit; Results (Dec. 12, 2013) (hereinafter Preliminary Instructions: All submissions should Results), available at http:// include the agency name and docket files.consumerfinance.gov/f/201312_cfpb_ 3 Dodd-Frank section 1028(b). number or Regulatory Information arbitration-study-preliminary-results.pdf. 4 Id. VerDate Sep<11>2014 18:00 May 23, 2016 Jkt 238001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 E:\FR\FM\24MYP2.SGM 24MYP2 mstockstill on DSK3G9T082PROD with PROPOSALS2 Federal Register / Vol. 81, No. 100 / Tuesday, May 24, 2016 / Proposed Rules 32831 • extending or brokering of dispute.6 Parties may include language In addition, and of particular automobile leases as defined in Bureau in their contracts, before any dispute relevance here, Congress directed the regulation; has arisen, committing to resolve future Bureau to study the use of arbitration • providing services to assist with disputes between them in arbitration agreements in connection with other, debt management or debt settlement, rather than in court or allowing either non-mortgage consumer financial modify the terms of any extension of party the option to seek resolution of a products and services and authorized consumer credit, or avoid foreclosure; future dispute in arbitration. Such pre- the Bureau to prohibit or restrict the use • providing directly to a consumer a dispute arbitration agreements—which of such agreements if it finds that such this proposal generally refers to as action is in the public interest and for consumer report as defined in the Fair 7 13 Credit Reporting Act, a credit score, or ‘‘arbitration agreements’’ —have a long the protection of consumers. Congress other information specific to a consumer history, primarily in commercial also required that the findings in any contracts, where companies typically such rule be consistent with the from a consumer report, except for bargain to create agreements tailored to Study.14 The Bureau solicited input on adverse action notices provided by an their needs.8 In 1925, Congress passed the appropriate scope, methods, and employer; 15 • what is now known as the Federal data sources for the Study in 2012 and providing accounts under the Truth Arbitration Act (FAA) to require that released results of its three-year study
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