Financial Services Report, Summer 2015

In This Issue:

- Arbitration Report

- Beltway Report

- Bureau Report

- Mobile & Emerging Payments Report

- Mortgage & Fair Lending Report

- Operations Report

- Preemption Report

- Privacy Report

- TCPA Report

- Excerpt from Arbitration Report:

The Other Shoe Drops -

The CFPB released its long awaited Report to Congress on arbitration agreements in consumer financial contracts. The Report’s conclusion, and Director Richard Cordray’s remarks, were as expected: that consumers are better served by litigation— and particularly, class action litigation—than by agreements to arbitrate disputes. The Report addresses nine key areas, including the prevalence and features of arbitration agreements, consumer understanding of arbitration agreements, the types and resolutions of claims in arbitration and in court, and the value of class action settlements. Although the Report comes in at over 700 pages, the CFPB recognized that it lacked sufficient information to evaluate several critical areas. Want to know more?

Like Oil and Water -

Another court has considered the interplay between the Bankruptcy Code and the Federal Arbitration Act, this time in a case about a payday loan servicer’s proof of claim. Moses v. CashCall, 781 F.3d 63 (4th Cir. 2015). Plaintiff filed for bankruptcy, and the servicer CashCall filed a proof of claim. Plaintiff then filed an adversary proceeding (1) seeking a declaratory judgment that the loan was void and (2) asserting a claim for violation of a state debt collection statute. CashCall moved to withdraw its proof of claim or, in the alternative, to compel arbitration. The court affirmed the lower courts’ conclusion that plaintiff’s declaratory judgment claim was a constitutionally core claim under the Bankruptcy Code, so sending that claim to arbitration would “inherently conflict with the Bankruptcy Code’s purposes.” Id. at 72. However, the court reversed the lower courts’ refusal to send the debt collection claim to arbitration because the claim was not a constitutional core claim and its connection to the core declaratory judgment claim was too attenuated to overcome the presumption in favor of arbitration.

Please see full issue below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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