On October 10, the CFPB issued a consent order against a California-based private arbitration company that offers an online dispute resolution platform, for alleged issues related to its student loan collections. According to the CFPB, in April 2022, respondent allegedly commenced arbitration proceedings against consumers who had not provided consent, in violation of the CFPA. The proceedings were related to consumers’ alleged default on income share loans extended by an online training program provider, which was shut down following a separate CFPB and 11-state enforcement action (previously covered in InfoBytes, here and here). The company was allegedly aware it lacked jurisdiction over the claims because none of the income share loans contained an arbitration clause permitting arbitration by this company.

Additionally, the Bureau found that the company allegedly committed deceptive acts and practices by misrepresenting its neutrality, the nature of the arbitration proceedings, and the consequences of consumers’ actions or inactions. For example, the company allegedly falsely represented itself as a neutral and impartial forum for consumer debt arbitrations and failed to disclose its financial alignment with the creditor that filed the claim against the consumer. Furthermore, the Bureau found that the company allegedly engaged in unfair practices by unlawfully attempting to bind consumers to its terms of service and platform rules. The company has not admitted or denied the CFPB’s claims.