On Waiving Class Action Waivers: A Critique and Defense of the Consumer Financial Protection Bureau’s Proposed Regulations
Volume 89, No. 1, Fall 2016
By Nicholas M. Engel, J.D., Temple University Beasley School of Law, 2016 [PDF]

Consumer protection is a dynamic field with many regulatory players. A recent (and contentious) entrant is the Consumer Financial Protection Bureau (CFPB), created with the passage of Dodd-Frank in 2010. Some view the CFPB as a politically unaccountable agency whose actions will ultimately harm consumers. Consequently, the Bureau’s operation has been hindered by congressional attempts to delay confirmation of its director, to defund it or limit its powers, and even to shutter it completely. Others laud the CFPB as an important step in advancing consumer protection.

In spite of strident opposition, the CFPB is steaming ahead with its mandate to protect consumers. Part of the CFPB’s congressionally delegated task is the oversight of contracts between consumers and suppliers of financial services and products. Specifically, Congress authorized the CFPB to study and regulate provisions that force consumers to waive their rights to bring individual or class suits against financial service corporations. Such provisions cause sharp disagreement between consumer advocates and financial service corporations.

This Comment examines the CFPB’s statutory mandate to study such mandatory arbitration clauses and its authority to regulate such agreements. Ultimately, this Comment contends that permitting consumers to proceed as a class is an important component of a robust system of consumer protection and that the CFPB is justified in preventing financial corporations from requiring consumers to waive such rights.