House Passes Repeal of CFPB Arbitration Rule
Fri 04 Aug, 2017 / by McIntyre & Lemon / Legislative Updates
08/04/17 – The House of Representatives voted to overturn the Consumer Financial Protection Bureau’s (CFPB) new arbitration regulation.
Using the Congressional Review Act (CRA), the House voted along party lines to remove the CFPB’s latest rule governing pre-dispute arbitration.
The CRA allows both chambers of Congress to vote on resolutions of disapproval for regulations within 60 legislative days of the rules being published in the Federal Register. The 231-190 vote was the culmination of weeks of criticism from Congressional Republicans and business groups of the CFPB rule to prohibit class action lawsuit waivers in consumer pre-dispute arbitration agreements. In other words, consumer financial service companies may no longer use arbitration clauses to stop consumers from joining or initiating class action lawsuits.
The measure now must head to the Senate where it only needs a simple majority to pass. If the President signs the resolution, the CFPB will be barred from formulating a new regulation that looks substantially similar to the one that was nullified unless authorized by Congress to do so.