WASHINGTON–CUNA has joined with a coalition of other groups in a letter to members of the House and Senate committees on appropriations in support of a bill requiring the CFPB to conduct a study before adopting any rules that would restrict arbitration agreements and allow for class-action lawsuits.
Specifically, that language is included in the Womack-Graves amendment to the Fiscal Year 2016 Financial Services and General Government Appropriations bill, and its fate lies with the final FY 2016 Financial Services Appropriations bill conference agreement.
“Arbitration provides an essential alternative method of resolving disputes that is quicker and cheaper than the expensive, overburdened court system. It also is easier for consumers to navigate on their own—freeing them from reliance on self-interested lawyers,” the letter states. “More than 250 companies—including many of the nation’s largest businesses—have registered consumer arbitration clauses with the American Arbitration Association.
“The Dodd-Frank Act required the CFPB to study arbitration clauses in consumer financial contracts prior to seeking to regulate these clauses to the extent regulation was justified by the study’s findings,” the letter continues. “As more than 80 members of Congress recognized…the study process was opaque, incomplete, and unfair. That study failed to address the most important question—how consumers would be able to resolve disputes cheaply and speedily if arbitration is limited and consumers are left to the mercy of the plaintiffs’ class-action trial lawyers and the increasingly overcrowded and complex judicial system.
“Notwithstanding the serious flaws in its study and the many questions the study left unanswered, the Bureau announced earlier this fall that it plans to propose a rule that would prohibit the application of arbitration agreements to class-action lawsuits. The Bureau’s own study found that class actions provide little benefit to consumers (an average of $32), but lawyers reap an average fee of $1 million for each settled case. It is no wonder that plaintiffs’ lawyers and their allies have made regulating arbitration their top priority.”
Other signatories on the letter included the American Bankers Association, American Financial Services Association, Consumer Bankers Association, Consumer Data Industry Association, Consumer Mortgage Coalition, CTIA –The Wireless Association, Electronic Transactions Association, Financial Services Roundtable, National Association of Independent Housing Professionals, Real Estate Services Providers Council, Inc., Small Business & Entrepreneurship Council, U.S. Chamber Institute for Legal Reform, and the U.S. Chamber of Commerce.