Financial Contract Changes Require Vigilance

Data Grab in CFPB's Arbitration Plan Spooks Industry
– American Banker

American Banker quoted Manatt’s Richard Gottlieb, a partner in the firm’s Consumer Financial Services practice, for an article about the CFPB's proposal released earlier this month that will restrict the use of arbitration clauses for financial firms.

Gottlieb said companies that acquire consumer contracts should be paying particular attention if the contracts have arbitration provisions that contain class action waivers. While the new rules do not apply retroactively, the proposal "includes a trap for the unwary in that nonparties to the original contract, such as auto finance companies that purchase consumer contracts from dealers, may be unable to enforce a preexisting provision without adding the prescribed new language," he warned.

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