Comments filed for CFPB class action waiver rule
Dealer law firm Charapp & Weiss, LLP has filed comments on the Consumer Financial Protection Bureau (CFPB)ês proposed rule on class action waivers on behalf of WANADA and 30 other state and metro dealer associations.
The CFPB proposal prevents the use of class action waivers in predispute arbitration clauses by creditors or lessors under CFPB jurisdiction. In its comments, Charapp & Weiss pointed out that the proposal was inconsistent with the CFPBês own study and that even its study did not support preventing class action waivers in large balance transactions such as those for car deals.
The comments also noted the potential damage to dealers, over which the CFPB has no authority. The proposal would make dealers directly subject to class actions because creditors and lessors will include the ruleês required language preserving class actions in form agreements that will bind dealers (who in most states are the initial creditor or lessor). Even more of a problem for dealers, creditors and lessors faced with liability will pass the liability on to dealers through the broad indemnification provisions in indirect finance and indirect lease agreements with dealers.
As of mid-September, the CFPB has posted 5,910 comments on the Federal Register website, making the proposal a highly controversial one.
The CFPB is expected to announce its final regulation soon. It would apply to agreements entered into 210 days after the final regulation is published. The result could have a major impact on dealer liability.
Thanks to Michael Charapp of Charapp & Weiss, LLP for providing this information.Download Bulletin PDF