Last week, the CFPB released an outline of the proposals it is considering for regulating the use of arbitration agreements in anticipation of convening a Small Business Regulatory Enforcement Fairness Act (SBREFA) panel. As described in more detail in our legal alert, the proposals would ban companies from including arbitration clauses that block class action lawsuits in their consumer contracts.
The panel members are the CFPB, the Chief Counsel for Advocacy of the Small Business Administration (SBA), and the Office of Management and Budget’s Office of Information and Regulatory Affairs. We have learned from the SBA that the panel will be convened next week and meet with small entity representatives (SERs) (who have already been selected) on October 28 to discuss the proposals. As indicated in the CFPB’s fact sheet on the SBREFA panel process, the panel will issue a report on the input received from the SERs within 60 days of convening.
The CFPB has also released a list of issues on which it will be seeking input from the SERs. (The list, together with the outline of the CFPB’s proposals, will be distributed to the SERs in advance of their meeting with the panel.) The questions deal with the following topics:
- Experience using arbitration agreements and in arbitration proceedings (including whether the CFPB’s proposals would change the decision of an SER’s business to use or not use arbitration agreements)
- Experience with class litigation (including the cost impact to the SER’s business of dealing with class litigation or the threat of it)
- Investment in compliance with consumer protection laws (with the questions directed at the operating costs incurred by the SER’s business in performing compliance-related activities, including a comparison of the compliance costs incurred by a business that uses arbitration agreements before it used such agreements with current costs)
- Alternatives considered (including the SER’s views on the option considered by the CFPB to allow companies to give the consumer a choice of bringing a class proceeding in arbitration or in court)
- Cost of credit to small entities (including whether the SER’s business uses consumer products as a source of financing)
- Other issues (including the cost to the SER’s business of complying with the CFPB’s proposed requirement that companies choosing to use arbitration clauses for individual disputes submit arbitration claims and awards to the CFPB)