CFPB Finds Arbitration Harms Consumers, Presaging New Rules

Financial companies routinely use mandatory arbitration to block class-action lawsuits, making it difficult for consumers to win big payouts in disputes over credit cards and other products, a U.S. regulator found.

When credit-card issuers have faced suits seeking class-action status, companies invoked arbitration clauses to keep squabbles out of court almost two-thirds of the time, according to a Consumer Financial Protection Bureau study scheduled to be published Tuesday. The findings pave the way for the agency to propose a ban of forced arbitration or to severely restrict the practice.