usc 12 § 5518
Authority to restrict mandatory pre-dispute arbitration (BANKS AND BANKING (12 U.S.C.))
Operative Text
The Bureau shall conduct a study of, and shall provide a report to Congress concerning, the use of agreements providing for arbitration of any future dispute between covered persons and consumers in connection with the offering or providing of consumer financial products or services. The Bureau, by regulation, may prohibit or impose conditions or limitations on the use of an agreement between a covered person and a consumer for a consumer financial product or service providing for arbitration of any future dispute between the parties, if the Bureau finds that such a prohibition or imposition of conditions or limitations is in the public interest and for the protection of consumers. The findings in such rule shall be consistent with the study conducted under subsection (a). The authority described in subsection (b) may not be construed to prohibit or restrict a consumer from entering into a voluntary arbitration agreement with a covered person after a dispute has arisen. Notwithstanding any other provision of law, any regulation prescribed by the Bureau under subsection (b) shall apply, consistent with the terms of the regulation, to any agreement between a consumer and a covered person entered into after the end of the 180-day period beginning on the effective date of the regulation, as established by the Bureau.
Under 12 U.S.C. § 5518, the Consumer Financial Protection Bureau (CFPB) is directed to study how pre-dispute arbitration clauses are used in consumer financial product and service agreements and to report its findings to Congress. Based on that study, the Bureau holds regulatory authority to prohibit, limit, or place conditions on mandatory arbitration clauses in consumer financial contracts if doing so is found to serve the public interest and protect consumers. Importantly, the provision does not affect arbitration agreements that consumers voluntarily enter into after a dispute has already arisen, and any resulting regulation applies only to contracts entered into at least 180 days after the regulation takes effect.
Plain English — not legal advice.
Although 12 U.S.C. § 5518 is primarily directed at financial-services providers rather than residential landlords, property owners who offer consumer financial products or services—such as certain financing arrangements—should be aware that the CFPB holds authority to restrict pre-dispute arbitration clauses in those agreements. Operators who include mandatory arbitration provisions in consumer financial contracts generally monitor CFPB rulemaking activity under this section to ensure their standard agreements remain compliant. Because any regulation issued under § 5518 applies only to contracts executed after the 180-day implementation window, compliance reviews typically focus on the effective date established in the relevant rule.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Under 12 U.S.C. § 5518, consumers have a baseline protection in that the CFPB can regulate or restrict mandatory pre-dispute arbitration clauses embedded in consumer financial product and service agreements. Notably, this provision preserves a consumer's right to choose arbitration voluntarily after a dispute has already arisen, meaning that right cannot be taken away by this authority. Tenants or consumers who believe a financial agreement's arbitration clause may be affected by CFPB rulemaking under § 5518 can review the CFPB's published rules and guidance, consult a tenant-rights or consumer-rights organization, or raise the issue with a housing counselor for general information about their options.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 13, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
Effective Timeline
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