PRA Supporting Statement for Arbitration NPRM - final

Notice of Proposed Rulemaking (RIN 3170-AA51)

BUREAU OF CONSUMER FINANCIAL PROTECTION
PAPERWORK REDUCTION ACT SUBMISSION
INFORMATION COLLECTION REQUEST

SUPPORTING STATEMENT PART A
Arbitration Agreements
Disclosure and Reporting Requirements
Notice of Proposed Rulemaking for 12 CFR part 1040
(OMB CONTROL NUMBER: 3170-XXXX)

OMB TERMS OF CLEARANCE:
Not applicable. This is a new information collection request and as such has not heretofore been
reviewed by the Office of Management and Budget (OMB); therefore, there are no OMB Terms
of Clearance.
ABSTRACT:
Pursuant to section 1028(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act
(Pub. L. 111-203), the Bureau of Consumer Financial Protection (Bureau) is proposing to
establish 12 CFR part 1040, which would contain regulations governing the use of agreements
providing for arbitration of future disputes (hereinafter, arbitration agreements) by persons
providing or offering covered consumer financial products or services who are not eligible for an
exemption in the proposed rule (hereinafter, providers). In general, the proposal would prohibit
providers from relying upon an arbitration agreement in a class litigation case concerning a
covered consumer financial product or service. Relatedly, the proposal would include two types
of information collections: (1) a mandatory contractual provision using language specified by
the Bureau (with an alternative to send consumer notices in certain specified circumstances); and
(2) submission of certain arbitral records to the Bureau. These information collections are
described below.
JUSTIFICATION
1. Circumstances Necessitating the Data Collection
The rights of consumers and providers in the event of a dispute over a consumer financial
product or service are generally set forth in a written contract. Many contracts for consumer
financial products and services contain agreements that permit either party to use the agreement
to require that a dispute proceed in arbitration instead of in court (referred to herein as
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“arbitration agreements”). Most of these arbitration agreements forbid, or effectively otherwise
do not permit, consumers’ participation in class actions. Dodd-Frank section 1028(b) authorizes
the Bureau to prohibit or impose conditions or limitations on the use of an arbitration agreement
between a covered person and a consumer for a consumer financial product or service if the
Bureau finds that that such a prohibition or imposition of conditions or limitations is in the public
interest and for the protection of consumers. Section 1028(b) also requires that the findings in
such rule be consistent with a study of arbitration agreements performed by the Bureau pursuant
to Dodd-Frank section 1028(a).
For the reasons set forth more fully in the Bureau’s notice of proposed rulemaking attached
hereto (“NPRM”), the Bureau believes that precluding financial service providers from blocking
consumer class actions through the use of arbitration agreements would better enable consumers
to enforce their rights under federal and state consumer protection laws and the common law and
obtain redress when their rights are violated. The Bureau believes that this, in turn, would
strengthen the incentives for providers to avoid potentially illegal activities and reduce the
likelihood that consumers would be subject to such practices in the first instance. The Bureau
preliminarily finds that both of these outcomes, as well as others discussed in the NPRM, would
be in the public interest and for the protection of consumers under Dodd-Frank section 1028(b).
Accordingly, the NPRM would – among other things – require providers that enter into
arbitration agreements with consumers after the NPRM’s compliance date to ensure that those
agreements contain a specified provision stating that no person can use the agreement to stop the
consumer from being part of a class action case in court. This requirement would ensure that
consumers, courts, and other relevant third parties (including potential purchasers of accounts)
are made aware when reading the agreement that it may not be used to prevent consumers from
pursuing class actions concerning consumer financial products or services covered by the
NPRM. Moreover, to the extent a provider attempts to invoke a pre-dispute arbitration
agreement, consumers can invoke this contractual provision to enforce their right to proceed in
court for class claims.
While the NPRM would prohibit providers from blocking consumer class actions through the use
of arbitration agreements, it would not prohibit providers from maintaining arbitration
agreements in consumer financial contracts generally. The Bureau remains concerned, however,
that there is a potential for consumer harm in how arbitration agreements could be used to
influence the resolution of consumer financial disputes. The Bureau believes that it is important
that arbitral disputes going forward be subject to enhanced transparency, both to the Bureau and
to the broader public. Accordingly, the NPRM would require providers to submit specified
arbitral records to the Bureau relating to any arbitration agreement entered into after the
compliance date. The Bureau intends to publish these records on its website in some form, with
appropriate redactions or aggregation as warranted.
The Bureau believes the following provisions of the NPRM constitute information collections
under the Paperwork Reduction Act.
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The first information collection requirement relates to proposed disclosure requirements. The
proposal would require providers that enter into arbitration agreements with consumers after the
date set forth in proposed § 1040.5(a) (the “compliance date”) to ensure these arbitration
agreements contain a provision that is specified by proposed § 1040.4(a)(2) of the NPRM. The
specified provision would effectively state that no person can use the agreement to stop the
consumer from being part of a class action case in court. The Bureau proposed this language
and, if the rule is adopted as proposed, providers would be required to use it unless an
enumerated exception applies. Proposed § 1040.4(a)(2)(i) would specify the precise language of
the provision. Proposed § 1040.4(a)(2)(ii) would contain an alternative provision that providers
may use in arbitration agreements for multiple products or services only some of which would be
covered by the NPRM. This information collection is described herein as the “Contract
Provision Requirement.”
The NPRM contains two alternatives to the Contract Provision Requirement. One is available in
the circumstances described in proposed § 1040.4(a)(2)(iii)(B) (“Alternative for Providers
Entering into a Preexisting Arbitration Agreement”). The other is available to providers of
general purpose reloadable (“GPR”) prepaid cards in the circumstances described in proposed
§ 1040.5(b) (“GPR Prepaid Card Notification Alternative”).
The Alternative for Providers Entering into a Preexisting Arbitration Agreement would give
added flexibility to providers who enter into arbitration agreements that existed previously.
(This could occur when, for example, Bank A acquires Bank B after the compliance date; Bank
B had entered into arbitration agreements before the compliance date; and, as part of the
acquisition, Bank A enters into Bank B’s arbitration agreements so that Bank A could assert the
agreements in a lawsuit filed against it.) Under this alternative, which is set forth in proposed
§ 1040.4(a)(2)(iii), if a provider enters into an arbitration agreement that existed previously and
the agreement does not already comply with the Contract Provision Requirement, the provider
would be required to take specified action within 60 days of entering into the arbitration
agreement. The provider would be required either to ensure the agreement is amended to contain
the specified provision or to send any consumer to whom the agreement applies a written notice
stating the provision.
Under the GPR Prepaid Card Notification Alternative set forth in proposed § 1040.5(b), the
Contract Provision Requirement would not apply to an arbitration agreement for a GPR prepaid
card in certain circumstances. For providers that do not have the ability to contact the consumer
in writing, the Contract Provision Requirement would not apply to an arbitration agreement for a
GPR prepaid card if (1) the consumer acquires a GPR prepaid card in person at a retail store, (2)
the arbitration agreement was inside of packaging material when the GPR prepaid card was
acquired, and (3) the arbitration agreement was packaged prior to the compliance date. For
providers that have the ability to contact the consumer in writing, the Contract Provision
Requirement would not apply to an arbitration agreement for a GPR prepaid card if the provider
meets these same three requirements and, within 30 days of obtaining the consumer’s contact
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information, the provider notifies the consumer in writing that the pre-dispute arbitration
agreement complies with the Contract Provision Requirement by providing an amended predispute arbitration agreement to the consumer.
The second information collection requirement relates to proposed reporting requirements.
Proposed § 1040.4(b) would require providers to submit specified arbitral records to the Bureau
relating to any arbitration agreement entered into after the compliance date. Providers would be
required to submit certain records used in connection with cases filed in arbitration (“Arbitral
Case Records Submission Requirement”). In particular, providers would be required to submit
the following four types of documents in connection with any claim filed in arbitration: (A) the
initial claim and any counterclaim; (B) the arbitration agreement filed with the arbitrator or
administrator; (C) the judgment or award, if any, issued by the arbitrator or arbitration
administrator; and (D) if an arbitrator or arbitration administrator refuses to administer or
dismisses a claim due to the provider’s failure to pay required filing or administrative fees, any
communication the provider receives from the arbitrator or an arbitration administrator related to
such a refusal. In addition to the Arbitral Case Records Submission Requirement, the proposal
would require the submission of any communications the provider receives from an arbitrator or
arbitration administrator related to a determination that an arbitration agreement for a product or
service covered by the NPRM does not comply with the administrator’s fairness principles, rules,
or similar requirements (“Arbitration Agreement Unfairness Submission Requirement”).
All documents covered by the Arbitral Case Records Submission Requirement and the
Arbitration Agreement Unfairness Submission Requirement must be submitted to the Bureau
within 60 days of filing by the provider or, in the case of records filed by other persons (such as
arbitrators or arbitration administrators), receipt by the provider. Before submitting these
documents to the Bureau, the provider would be required to redact any of nine specific types of
information specified in proposed § 1040.4(b)(3), to the extent such information appears in any
of these documents, including: (i) names of individuals, except for the name of the provider or
the arbitrator where either is an individual; (ii) addresses of individuals, excluding city, state, and
zip code; (iii) email addresses of individuals; (iv) telephone numbers of individuals; (v)
photographs of individuals; (vi) account numbers; (vii) Social Security and tax identification
numbers; (viii) driver’s license and other government identification numbers; and (ix) passport
numbers.
2. Use of the Information
As discussed above, under the proposed Contract Provision Requirement, arbitration agreements
between consumers and providers would be required to include the Bureau’s mandated language.
Because these are generally form contracts prepared by the provider, providers entering into
these arbitration agreements with consumers would be required to ensure the agreement contains
the mandated provision (or, in certain circumstances described above, send notices to consumers
in the absence of the arbitration agreement containing such a provision). As reflected in the
Bureau’s Section 1022(b)(2) Analysis in the NPRM, the Bureau does not believe this would be
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an especially burdensome requirement. 1 For most providers, this would entail a one-time change
to the provider’s standard-form agreement. By proposing specific mandated language, rather
than a general requirement that contract language must meet, the Bureau believes the proposal
would reduce uncertainty regarding what type of contract provisions are permissible and
therefore reduce the burden of analyzing what is required. The Bureau expects that, if
implemented, this provision would be used by a number of different parties. The Bureau expects
consumers, providers, their counsel, courts, and the Bureau itself all would reference this
provision from time to time. The Bureau expects that the use of consistent language in the
provision would reduce uncertainty for all parties concerned about providers’ legal obligations.
The Arbitral Case Records Submission Requirement would require providers to submit specified
arbitration records to the Bureau. As outlined above, the NPRM specifically describes each type
of record that must be submitted, and the Bureau believes each type of record is a standard type
that providers would be able to readily identify in connection with any arbitration they or
consumers file concerning a covered consumer financial product or service. The Bureau does
not believe identifying, redacting as necessary, and mailing or e-mailing these records to the
Bureau within 60 days of filing or receipt from another person, as the Bureau has proposed,
would entail significant burden on any individual provider. It also is possible that arbitration
administrators would develop a mechanism to assist providers in complying with this proposed
obligation. Further, as described in the NPRM, arbitrations pertaining to consumer financial
products and services are relatively infrequent. In the Study, the Bureau documented an average
of 616 cases per year for six product markets combined; in comparison, the NPRM would create
class action exposure for about 53,000 providers. As a result, at present, the likelihood is low
that a given provider would have to provide any information to the Bureau under proposed
§ 1040.4(b) in a given year.
With respect to uses of this information, the Bureau at a minimum plans to analyze trends in
consumer dispute resolution to determine if particular arbitration administrators or providers are
impeding the ability of consumers to effectively resolve disputes through arbitration, whether in
general or in particular types of cases. Specifically, the Bureau would use the collection of
arbitration claims, among other things, to track the raw numbers of arbitrations and to better
understand what types of claims consumers and providers are bringing to arbitration. The
Bureau would use the collection of awards, among other things, to gain insight into the types of
claims that reach the point of an adjudication and the way in which arbitrators resolve these
claims. The collection of arbitration agreements, in conjunction with other information
collected, would allow the Bureau to monitor the impact that particular clauses in arbitration
1

The burden may be higher for companies that acquire credit accounts from merchants not covered by the Bureau’s
proposal. Unless such merchants voluntarily make one-time changes to all such credit agreements, the acquirers
would instead be required to ensure the agreements are amended (or provide consumer notices) on a rolling basis as
the credit accounts are acquired. For example, buyers of medical debt would need to identify which accounts
involve consumer credit originated by a creditor under the Equal Credit Opportunity Act, 15 U.S.C. 1691 et seq.,
and ensure amendments are made or send notices to those consumers. The Bureau believes these amendments or
notices could be consolidated with other legally-mandated notices, to the extent the provider must send those.
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agreements have on consumers and companies, the resolution of those claims, and how
arbitration agreements evolve. Collection of correspondence regarding non-payment of fees and
non-compliance with due process principles would, among other things, allow the Bureau insight
into whether and to what extent providers fail to meet the arbitral administrators’ standards.
Collection of this information would also allow the Bureau to take action against providers that
are engaging in potentially illegal actions that impede consumers’ ability to bring claims against
their providers.
The Bureau also intends to publish the materials it receives on its website in some form, with
appropriate redactions or aggregation as warranted. This information may be useful to the public
for additional purposes. For example, information about arbitration proceedings may be useful
to consumers with similar disputes. Such information may also help providers assess their
choice of administrator and become aware of practices of their competitors that are being
addressed through arbitration.
3. Use of Information Technology
The NPRM states that providers that elect to deliver the notice permitted by the Alternative for
Providers Entering into a Preexisting Arbitration Agreement may provide the notice in any way
the provider communicates with the consumer, including electronically. Regarding the GPR
Prepaid Card Notification Alternative, the NPRM states that providers that have the ability to
contact the consumer in writing could satisfy the requirement by, among other things,
communicating the new terms on the provider’s website or sending a compliant agreement to the
consumer. With respect to the latter, the Bureau believes that, in general, providers would be
able to use electronic communication where permitted by applicable law such as the E-SIGN
Act.
With respect to the Arbitral Case Records Submission Requirement, if finalized, the Bureau
intends to develop, implement, and publicize an electronic submission system for these
materials. Through such a system, the Bureau may permit providers to email these records to a
Bureau email address or to upload them to a Bureau website. The Bureau anticipates that this
system would be operational before the effective date of any final rule. If the Bureau finalizes
this provision and the system is not operational before such date, the Bureau may consider
delaying the effective date of the provision with respect to this proposed requirement.
4. Efforts to Identify Duplication
The Bureau does not believe that any of the information collections in the NPRM would be
duplicative. While the Bureau does collect credit card agreements and has proposed to collect
prepaid account agreements, which may contain arbitration agreements, these agreements cannot
be used or modified for the purposes described in Item 2 above, because, to accomplish these
purposes, the Bureau needs to receive the specific agreement that the provider is relying on in the
arbitration at issue.
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The Bureau is aware of only one similar federal rule, which requires SEC-regulated broker
dealers to include specified language in their arbitration agreements that prevents application of
the arbitration agreements to class actions and also requires that arbitral awards be made public.
The Bureau believes these requirements are substantially similar to its proposed Contract
Provision Requirement and Arbitral Case Records Submission Requirement. Accordingly, to
avoid duplication with this preexisting regulation of arbitration agreements used by SECregulated broker dealers, the Bureau has proposed an exemption for broker dealers in proposed
§ 1040.3(b)(1). As a result, broker dealers covered by the SEC rule would not be subject to the
proposal.
More broadly, the Bureau does not foresee significant duplication of its own activities. The
Bureau’s existing programs do not generate access to the types of ongoing, systematic, and
timely data that the Arbitral Case Records Submission Requirement would create. For example,
the Bureau supervises certain larger participants in certain markets, and may in the course of its
supervision activities review certain arbitral case records relating to consumer disputes, but such
a review is not systematically performed at all supervised entities. Furthermore, most of the
entities affected by the proposal are not supervised by the Bureau. The Bureau also only
conducts supervision examinations on a periodic and risk-based basis. Therefore, even for
entities it does supervise, the arbitral records that must be submitted would not be seen by the
Bureau until some time (often well more than 60 days) after the submission to the Bureau would
be required under the NPRM.
5. Efforts to Minimize Burdens on Small Entities
In its initial regulatory flexibility analysis (IRFA) provided in the NPRM, the Bureau estimates
that the NPRM would affect 51,000 small entities that provide products or services covered by
the proposal.
In October 2015, the Bureau convened a Small Business Review Panel (Panel) with the Chief
Counsel for Advocacy of the Small Business Administration (SBA) and the Administrator of the
Office of Information and Regulatory Affairs with the Office of Management and Budget
(OMB). 2 As part of this process, the Bureau prepared an outline of proposals under
consideration and alternatives considered (Outline), which the Bureau posted on its website for
review by the small financial institutions participating in the panel process, as well as the general
public. 3 Working with stakeholders and the agencies, the Bureau identified 18 Small Entity
2

The Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), as amended by section 1100G(a) of
the Dodd-Frank Act, requires the Bureau to convene a Small Business Review Panel before proposing a rule that
may have a substantial economic impact on a significant number of small entities. Public Law 104-121, tit. II, 110
Stat. 847, 857 (1996) (as amended by Public Law 110-28, section 8302 (2007)).
3
CFPB, Press Release, CFPB Considers Proposal to Ban Arbitration Clauses that Allow Companies to Avoid
Accountability to Their Customers (Oct. 7, 2015), available at http://www.consumerfinance.gov/newsroom/cfpbconsiders-proposal-to-ban-arbitration-clauses-that-allow-companies-to-avoid-accountability-to-their-customers/.
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Representatives (SERs) to provide input to the Panel on the proposals under consideration. With
respect to some markets, the relevant trade groups reported significant difficulty in identifying
any small financial services companies that would be impacted by the approach described in the
Bureau’s Outline. During the Panel, small entities voiced minimal concerns with the information
collection components of the proposal.
Several aspects of the Bureau’s proposed rule are designed to minimize burden on providers,
including small entities. Examples include the Contract Provision Requirement, which may
reduce burden by reducing confusion about what contractual language would satisfy the
Bureau’s rule; the Alternative for Providers Entering into a Preexisting Arbitration Agreement,
which allows providers entering into preexisting arbitration agreements the option of providing
written notice in place of amending the underlying contract; and the GPR Prepaid Card
Notification Alternative, which may reduce burden by giving providers an alternative to pulling
non-compliant packages from retail store shelves and replacing them.
6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction
If the Contract Provision Requirement (and the associated alternatives described above) were not
implemented, the Bureau believes that a significant number of arbitration agreements entered
into in the future could include language that on its face may be misleading to consumers,
providers, courts, or others. In particular, these arbitration agreements, by virtue of not
specifying which cases they do and do not apply to, could create the misimpression that they
apply to class litigation, when the NPRM would otherwise not permit such application of the
agreements. Without the mandated language, the Bureau also believes some providers may face
uncertainty as to how to describe the relationship between the arbitration agreement and the
Bureau’s proposed rule. Such uncertainty could lead providers to incur costs related to the
drafting of language and/or perhaps choose to drop arbitration agreements altogether.
With respect to the Arbitral Case Records Submission Requirement and the Arbitration
Agreement Unfairness Submission Requirement, the Bureau has proposed to require submission
of a core set of materials that would enable the Bureau to determine the nature of the dispute, its
outcome (in the case of an award), and whether problems with the arbitration agreement itself or
the payment of fees under that agreement interfered with the ability of the parties to pursue the
arbitration. Without these core materials, the Bureau would not be in a position to attempt to
identify, for example, the types of cases that are being pursued in arbitration, whether there are
patterns across cases that may indicate unfairness in the way the arbitral forum is being used or
functioning, or whether there are significant obstacles to the ability of consumers to pursue these
cases in arbitration. To the extent the Bureau decides in the future to publish any of these
materials or summary statistics, the Bureau believes that these inputs are important to inform the
The Bureau also gathered feedback on the Outline from other stakeholders and members of the public, and from the
Bureau’s Consumer Advisory Board (CAB). See http://www.consumerfinance.gov/advisory-groups/advisorygroups-meeting-details/ (video of the Bureau’s October 2015 presentation to the CAB).
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public on the foregoing and other relevant issues as well.
In terms of requiring redaction by providers of certain examples of consumer information in any
materials submitted under these requirements, the Bureau believes this requirement facilitates
compliance with section 1022(c)(4)(C) of the Dodd-Frank Act. That statutory provision states
that the Bureau may not use its market monitoring authority to obtain records from providers
“for purposes of gathering or analyzing the personally identifiable financial information of
consumers.” The Bureau believes it has identified the examples of such information that are
likely to exist in the records submitted under the proposed rule. The redaction requirement is
therefore focused on only these examples, and is not tied more generally to any other types of
information that may be considered “personally identifiable financial information” in a generic
sense. The Bureau believes this approach would reduce burden on providers while meeting the
requirements of section 1022(c)(4)(C).
7. Circumstances Requiring Special Information Collection
There are no special circumstances. The collection of information is conducted in a manner
consistent with the guidelines in 5 CFR 1320.5(d)(2).
8. Consultation Outside the Agency
In accordance with 5 CFR 1320.11, the Bureau has published an NPRM in the Federal Register
inviting the public to comment on the information collection requirements contained in the
proposed rule. Comments received in response to the NPRM would be addressed in the
preamble to any final rule.
9. Payments or Gifts to Respondents
Not applicable. No payments or gifts to respondents will be provided.
10. Assurances of Confidentiality
Not applicable. No assurances of confidentiality will be provided to covered entities responding
to the information collection requirements contained in the NPRM.
11. Justification for Sensitive Questions
Not applicable. The proposed information collection does not contain any questions of a
sensitive nature.

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12. Estimated Burden of Information Collection
Exhibit 1: Burden Hour Summary
Information
Collection
Requirement
One time burden
for changing
existing predispute arbitration
agreements
[proposed
§ 1040.4(a)(2)]
Arbitral Case
Records
Submission
Requirement
[proposed
§ 1040.4(b)]
Totals:

No. of
Respondents

Type of IC

Frequency

48,000

3rd Party
Disclosure

One time

Up to 500

Reporting

On
occasion

48,500

Annual
Responses

Annual
Burden
Hours
96,000

Hourly
Rate 4

48,000

Average
Response
Time
2

$200

$19,200,000

500

2.5

1,250

$200

$250,000

48,500

97,250

Hourly
Costs

$19,450,000

A. Disclosure Requirements
As discussed above, the Bureau believes that this proposed rule would impose two new
information collection requirements on covered entities or members of the public that would
constitute collections of information requiring OMB approval under the PRA. As in its impact
analysis required by Dodd-Frank section 1022(b)(2) and in its Regulatory Flexibility Analysis
(RFA) (see preamble for the NPRM), the providers affected are providers that currently use
arbitration agreements.
The Contract Provision Requirement would require providers that enter into arbitration
agreements with consumers after the compliance date to ensure these arbitration agreements
contain a provision specified in proposed § 1040.4(a)(2). Under the Contract Provision
Requirement, providers would incur administrative expenses to make the one-time change to the
arbitration agreement itself. The Bureau anticipates that providers would incur and manage these
costs in one of three ways. First, providers that rely exclusively on third-party contract form
providers, with which they already have a relationship, would obtain compliant agreements from
the third-party provider. Second, providers that perform a periodic (e.g., annual) review of the
contracts they use with consumers would, as part of that review, either revise their arbitration
agreements or delete them. For these providers, it is unlikely that the proposed rule would cause
considerable incremental expense of changing or taking out the arbitration agreement insofar as
they already engage in a regular review, as long as this review occurs before the rule becomes
effective. Third, there are likely to be some providers that use contracts that are highly
4

Bureau of Labor Statistics, April 2016, Occupational Employment and Wage Estimates,
http://www.bls.gov/oes/current/oessrci.htm. The hourly rate is a weighted average composed of the average wages
for a specific sector and corresponding occupation.
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customized to their own needs and that might not engage in annual reviews. These would
require a more comprehensive review in order to either change or remove the arbitration
agreement. The Bureau believes that smaller providers are likely to fall into the first category.
The Bureau believes that the largest providers would fall into either the second or the third
category.
On average across all three categories, the Bureau believes that the average provider’s expense
for the administrative change related to the Contract Provision Requirement to be about $400 per
provider. This consists of approximately one hour of time from a staff attorney or compliance
person, at an hourly rate of $200, and an hour of supporting staff time, at an hourly rate of $200.
Accordingly, given the Bureau’s estimate that about 48,000 providers use arbitration
agreements, 5 the Bureau estimates that the overall paperwork burden from changing the contract
is about 96,000 hours across all NAICS codes, and the Bureau estimates that the proposed
Contract Provision Requirement would result in a one-time cost of about $19.2 million. The
breakdown by NAICS code is according to the tables presented in Section 1022(b)(2) and RFA.
No burden is taken for the ongoing providing of the required contractual provision since (1)
providing arbitration agreements is already part of providers’ standard business practice and (2)
the NPRM provides the specific language that must be used in the required contractual provision,
and, according to the implementing regulations of the Paperwork Reduction Act, the public
disclosure of information originally supplied by the Federal government is exempt from the PRA
definition of a “collection of information.” 6
The Contract Provision Requirement would also require certain providers – such as providers
that acquire consumer credit accounts from merchants not subject to the Bureau’s rule, and
buyers of consumer credit (including medical credit) – to ensure, when they enter into an
arbitration agreement, that the agreement is amended to contain a provision or that they send the
consumer a notice stating that the debt buyer would not invoke the pre-dispute arbitration
agreement in a class action. The Bureau believes that this cost is minimal since these providers
often send out other notices upon buying such consumer credit, and the Bureau’s required notice
could just be included with those already-required communications. Further, the proposed
regulation supplies the exact language required for such disclosures.
B. Arbitral Case Records Submission Requirement
The Arbitral Case Records Submission Requirement would require providers to submit specified
arbitral records to the Bureau relating to any arbitration agreement entered into after the
compliance date, primarily in connection with individual arbitrations. Given the low prevalence
of individual arbitration (the Study found an average of 616 arbitrations per year across six
5

This figure is lower than the figure cited above – that the proposed rule would create class action exposure for
about 53,000 providers – primarily because debt collectors do not incur the cost of changing the contract, as the
primary provider (such as the credit card issuer) incurs this cost.
6
See 5 CFR 1320.3(b)(2) & 1320.3(c)(2), respectively.
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consumer financial markets), the low burden per occurrence (sending redacted copies of alreadyexisting documents), and the possibility that some providers with arbitration agreements might
choose to drop arbitration agreements altogether instead of rewriting their current arbitration
agreements, the Bureau believes that this burden is minimal. The Bureau further believes that
some arbitration administrators might provide this service to the providers.
The Bureau’s section 1022(b)(2) and RFA analyses do not quantify the impact of the Arbitral
Case Records Submission Requirement. However, for purposes of the Paperwork Reduction Act
analysis, the Bureau assumes that this requirement would result in up to 500 responses per year.
The Bureau believes it is unlikely that this requirement would impose a cost of more than $100
per arbitration – a conservative estimate for the time required to copy or scan the documents and
either submit them electronically or mail them, including any postage costs. (The Bureau
expects that most providers would submit the required materials electronically, e.g., either
through email or by uploading them to the Bureau’s website.) To the extent covered persons
would be required to redact specific identifiers, as described above, this cost might increase,
conservatively, by a few hundred dollars on average due to the time to train the staff on the
specific identifiers and the time to redact the documents, for each arbitration. Thus, the Bureau
conservatively estimates a cost of about $500 per arbitration and an average response time of 2.5
hours, resulting in a total ongoing burden cost of about $250,000 across all providers. 7
13. Estimated Total Annual Cost Burden to Respondents or Recordkeepers
The Bureau does not estimate any capital/start-up or operating and maintenance costs associated
with the NPRM. The Bureau believes that the attorneys or compliance staff who would perform
the required tasks would overwhelmingly be individuals otherwise employed by the provider.
With respect to the Contract Provision Requirement, the Bureau believes that, to the extent
covered entities use contracts from form providers, the addition of the required provision might
be done by the form providers themselves, requiring a simple check by the provider’s
compliance staff to ensure that the provision has been added. With respect to the Arbitral Case
Records Submission Requirement, the Bureau does not anticipate that providers would incur any
materials or mailing costs, as the Bureau expects that most providers would submit the required
materials electronically. In the NPRM, the Bureau requests comment on whether there are any
additional costs required to comply with reporting, recordkeeping, and other compliance
requirements of the proposed rule that the Bureau does not assess.
14. Estimated Cost to the Federal Government
The Bureau estimates that any costs to the Bureau associated with the NPRM would be de
minimis in the context of the Bureau’s overall budget. The Contract Provision Requirement
7

The Bureau believes that the cost of the Arbitration Agreement Unfairness Determination Submission Requirement
would be negligible. The Bureau does not believe that any significant number of such communications currently
occur in a given year. The Bureau therefore does not assume any burden for this requirement in Exhibit 1.
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Notice of Proposed Rulemaking (RIN 3170-AA51)

imposes no obligations on the Bureau. With respect to the Arbitral Case Records Submission
Requirement, the Bureau intends, to the extent possible, to utilize existing personnel and
technology in order to make any costs related to submission and publication de minimis.
15. Program Changes or Adjustments
This is a new information collection request; therefore, all the burden (see item 12) is considered
a program change.
16. Plans for Tabulation, Statistical Analysis, and Publication
Not applicable. The Bureau currently has no plans to use the information for statistical analysis.
17. Display of Expiration Date
The OMB number will be displayed in the PRA section of the notice of final rulemaking and in
the codified version of the Code of Federal Regulations. Further, the OMB control number and
expiration date will be displayed on the Federal government’s electronic PRA docket at
www.reginfo.gov.
18. Exceptions to the Certification Requirement
The Bureau certifies that this collection of information is consistent with the requirements of 5
CFR 1320.9, and the related provisions of 5 CFR 1320.8(b)(3) and is not seeking an exemption
to these certification requirements.

SUPPORTING STATEMENT PART B - COLLECTIONS OF INFORMATION USING
STATISTICAL METHODS
Not applicable. This information collection request does not request the use of any statistical
methods.

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