On July 25, the House voted along party lines to strike down the CFPB’s final arbitration rule by a vote of 231 to 190, exercising its authority under the Congressional Review Act to overturn a new agency rule within 60 days of its publication. H.J. Res. 111, sponsored by Rep. Keith Rothfus (R-Pa.), invalidates the recently adopted rule that prohibits the use of mandatory pre-dispute arbitration clauses in certain contracts for consumer financial products and services. A similar measure was introduced by Senate Banking Committee Chairman Mike Crapo (R-Idaho). A date for the Senate vote has not yet been set.
American Bankers Association. President and CEO Rob Nichols applauded the action: “Today’s action is critical to ensuring the Bureau doesn’t provide trial lawyers with a regulatory windfall at consumers’ expense. In class-action lawsuits, the spoils go overwhelmingly—and sometimes exclusively—to a small group of highly motivated trial lawyers who specialize in filing a large volume of often frivolous litigation.”
Consumer Bankers Association. President and CEO Richard Hunt supported the action: “Consumers' access to arbitration, which has long provided a faster, more cost-effective, and higher recovery alternative to class action lawsuits, should not be undermined by a harmful rule resulting from an incomplete study by the CFPB. The Bureau's own study shows the average consumer receives $5,400 in cash relief when using arbitration and just $32 through a class action suit.”
U.S. Chamber of Commerce. In a key vote letter sent to the House before Tuesday’s vote, the Chamber of Commerce stated, “Even though this regulation is directed at financial firms, the CFPB’s rule impacts businesses of all types that the Bureau believes touch consumer finance – even mobile telephone service providers and website operators.” Furthermore, the CFPB “decided to issue a regulation that interferes with freedom of contract, imposes new burdensome regulations, hurts consumers, and rewards class action lawyers. Congress should assert its prerogatives and overturn this illegitimate rule.”