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Consumer Credit Regulation: Tex. Fin. Code Ann. §§ 346.001 to 346.206 (West) (Revolving Credit Accounts).

What types of lenders it applies to (e.g., banks vs. non-banks): Applies to “revolving credit accounts,” defined to include both those by which a consumer may obtain direct loans (“revolving loan accounts”) and those that provide credit cards that can be used to purchase goods or services from a third party or obtain loans from the creditor or a third party (“revolving triparty accounts”). §§ 346.003, 346.004.

Consumer Credit Regulation: Va. Code Ann. § 6.2-312 (Open-End Credit Plans); Va. Code Ann. §§ 6.2-313, 6.2-318.

What types of lenders it applies to (e.g., banks vs. non-banks): Applies broadly to lenders engaged in extending credit under open-end credit plans, whether or not lender maintains a physical presence in Virginia. Section does not apply to banks, savings institutions, or credit unions. § 6.2-312(A). Licensed short-term loan lenders are prohibited from extending open-end credit under this section. § 6.2-312(C).

Consumer Credit Regulation: Del. Code Ann. tit. 5, §§ 2214 to 2226 (Revolving Credit).

What types of lenders it applies to (e.g., banks vs. non-banks): Persons in the business of lending money, except banks, federal credit unions, insurance companies, and others that are lending money under the authority of another law. §§ 2201, 2202, 2215.

Licensure requirements and implications of licensure: Licensed required if person makes more than five loans within any twelve-month period. § 2202.

Size and length of loans to which the statute applies, and any restrictions in the statute on these features: Statute is silent.

Consumer Credit Regulation: Idaho Code §§ 28-41-101 to 28-49-107 (Credit Code).

What types of lenders it applies to (e.g., banks vs. non-banks): Applies broadly to all creditors, including small loan companies, licensed lenders, finance companies, sales finance companies, industrial banks and loan companies, and commercial banks. § 28-41-107. Does not apply to extensions of credit to government agencies, sale of insurance, transactions under public utility or common carrier tariffs in some circumstances, or the rates and charges of licensed pawnbrokers. § 28-41-202.

Consumer Credit Regulation: 815 Ill. Comp. Stat. § 205/4.2 (Revolving Credit; Billing Statements; Disclosures).

What types of lenders it applies to (e.g., banks vs. non-banks): Banks, savings and loan associations, credit unions, lenders licensed under Consumer Finance Act, Consumer Installment Loan Act or Sales Finance Agency Act, and any other lender. § 205/4.2.

Licensure requirements and implications of licensure: License is required for non-depository lender to charge more than 18%. § 205/4.2.

Size and length of loans to which the statute applies, and any restrictions in the statute on these features: Statute is silent.

Consumer Arbitration Agreements: 8.7.3.3 Loser Pays Rule Unconscionable

Loser pays rules render arbitration clauses unconscionable in many jurisdictions, as a “reallocation of the risks of the bargain in an objectively unreasonable or unexpected manner.”235 As the Ninth Circuit has put it, these types of provisions “demand [that consumers arbitrate] at risk of incurring greater costs than they would bear if they were to litigate their claims in federal court.”236

Consumer Arbitration Agreements: 8.7.4.3 Non-Mutual Clauses That Appear to Be Mutual

A business, particularly a creditor, may draft its arbitration provisions to give the appearance of binding both sides to arbitrate, but have the practical effect of not binding the business. As a result, a consumer’s action would be forced into arbitration while a creditor can continue to use the courts to collect on its debts from the consumer.

Consumer Arbitration Agreements: 8.7.4.4 Non-Mutual Appeal Rights

Arbitration agreements may appear facially neutral in allowing both sides to appeal an arbitrator’s award, but as a practical matter they may be drafted so that only the business and not the consumer is likely to be able to appeal from an award. The most common way to do this is to allow appeal of awards only if the award is for more than a certain dollar amount.

Consumer Arbitration Agreements: 8.7.6.2.3 Multiple damages

While arbitration agreements sometimes include provisions prohibiting punitive damages, it is rarer for there to be explicit provisions limiting multiple damages. The first question is whether a limitation on punitive damages applies to treble or other multiple damages recoveries. If not, then the consumer can proceed to seek multiple damages in arbitration. If treble damages are specifically prohibited, that can be an unenforceable provision when state law provides for their recovery.291

Consumer Arbitration Agreements: 8.7.8.4 Financial Incentives and Repeat-Player Bias Lead to Potential Bias

West Virginia’s highest court declares unconscionable an arbitration clause that permitted a lender to designate the decision maker, when the arbitration provider was compensated on a case-volume fee system.369 The reason was that “the decision maker’s income as an arbitrator is dependent on continued referrals from the creditor,” and thus the arrangement “so impinges on neutrality and fundamental fairness that it is unconscionable and unenforceable under West Virginia law.”370 The court cited i

Consumer Arbitration Agreements: 8.7.10.2 Even Neutral Confidentiality Provisions Put Consumers at a Disadvantage

Secrecy disadvantages individuals bringing arbitration proceedings against corporations when that corporation was party to a prior arbitration proceeding raising similar issues. While the corporation knows the details of that prior proceeding, the individual in the subsequent proceeding does not. Facially neutral confidentiality provisions disproportionately favor repeat participants who have firsthand knowledge of how prior arbitrations against them have fared.

Consumer Arbitration Agreements: 8.7.10.5 Secrecy As Part of the Nature of Arbitration

A number of courts have concluded that confidentiality and secrecy provisions are not grounds for a finding of unconscionability.439 They often view secrecy as part of the nature of arbitration,440 and find an attack on a secrecy requirement to be just an attack on the arbitration requirement itself. Such an attack, it is argued, singles out arbitration in a way prohibited by the FAA.441

Consumer Arbitration Agreements: 8.8.1 Introduction

It is common for a corporate defendant who has drafted an unconscionable arbitration clause, and who faces court scrutiny of the clause, to ask the court to rewrite the arbitration clause so that it will be enforceable: “We will agree to jettison the most extreme elements of the arbitration clause, and we ask the court to enforce the remainder of the clause.”