The comment period for the Consumer Financial Protection Bureau (CFPB)’s proposed arbitration rulemaking ended on Monday, and the Bureau received nearly 11,000 comments both strongly supporting and opposing the proposed rule. As proposed, the rule would prohibit the use of ar bitration clauses that preclude consumer class action lawsuits in consumer financial services contracts, but would allow companies to require consumers to pursue individual claims in arbitration.
Those supporting the rule – including Democratic Vice Presidential Candidate Tim Kaine and 37 other senators – argue that “forced arbitration shields corporations from accountability for abusive, anti-consumer practices, which only encourages unscrupulous business practices by allowing violations of the law to go unchecked.” Another letter, from a group of 19 state attorneys general, argues that consumer class actions “have been a vehicle to prompt rapid reform through settlement across a variety of industries.”
A number of organizations – including the Securities Industry and Financial Markets Association and the National Association of Insurance Commissioners – have weighed in to oppose the rule, with particular focus on the industries they represent. And, in a 103 page submission yesterday, the U.S. Chamber of Commerce argued that in crafting this proposed rule, the Bureau ignored data from its own study demonstrating both the benefits of arbitration to consumers and the failure of class-action lawsuits to provide meaningful benefits to consumers . . . and has closed its eyes to the inevitable real-world consequence of its proposed rule: the elimination of arbitration, which would leave consumers without any means of redressing the injuries they most often suffer.”