Pub. 7 2016 Issue 2

SUMMER 2016 17 West Virginia Banker Covered by the proposed rule are a number of financial prod- ucts, including credit cards, prepaid cards, checking and savings accounts, money-transfer services, certain auto and title loans, payday and installment loans, and student loans. The rule would affect contracts entered into 210 days after the effective date of the rule, which is expected to occur sometime in 2017. Banks and other financial institutions seeking to include arbitration clauses in consumer contracts should monitor the progress of the rule and consult with counsel for a complete assessment of whether contracts need to be revised or updated in light of the proposal. n Make Your Shareholders happY! Use our C&I Program to instantly add loan growth and diversification. Contact your representative today or email to CI@centerstatebank.com 704.496.2612 5960 Fairview Road, Suite 400 Charlotte, NC 28210 www.csbcor respondent.com CFPB Director Richard Cordray has stated that many financial companies “avoid accountability” by using mandatory arbitration clauses to block consumer class actions, adding that “signing up for a credit card or opening a bank account can often mean signing away your right to take the company to court if things go wrong.” But not everyone shares this view. Rob Nichols, president of the American Bankers Association, released a statement on the pro- posal, stating that consumers “will get less and pay more” under the proposed rules. Nichols also noted that many banks resolve most disputes quickly and amicably, and that arbitration, “when needed…is an efficient, fair and low-cost method of resolving disputes in a fraction of the time – and at a fraction of the cost – of expensive litigation.” In- deed, despite the study’s general claim that arbitration agreements are detrimental to consumers, some in the industry point out that, in reality, the data in the study confirms that arbitration is a faster and less expensive option for consumer dispute resolution. The proposal is heralded by some as a boon to class-action trial lawyers, but while plaintiffs’ attorneys expect an uptick in class-action lawsuits, they do not anticipate the flood of litigation that bankers and others may fear. Further, the proposal would re- quire reporting of certain data with respect to arbitration claims, the goal being to make the arbitration process fairer. Dave Thomas is Managing Partner of Dinsmore’s Morgantown office, practicing in the Corporate Department. Dave focuses on banking law, bankruptcy, commercial transactions and commercial litigation. He as- sists corporate clients and financial institutions in a variety of commercial matters including loan structuring, workouts, collections, bankruptcy, and regulatory compliance. He has significant experience representing creditors in bankruptcy, includingChapter 7, 11 and 13 cases. He speaks regularly on bankruptcy and banking topics. Dave is a member of the firm's Professional Development Committee. Michael T. Dean is an associate in Dinsmore’s Cincinnati office, where he practices in the firm’s Traditional Governmental Finance and Eco - nomic Development practice areas within the Public Finance group. The attorneys in these practice areas assist a variety of state and local government entities to structure financing transactions for an array of publicly-financed projects through the use of tax-exempt, taxable and tax increment financing.