Removing Barriers Blog

CUNA Expresses Concerns to CFPB about SBREFA Proposals for Arbitration Agreements
Posted November 13, 2015 by CUNA Advocacy

In a letter to the CFPB, the Small Business Administration Office of Advocacy, and the Office of Information and Regulatory Affairs (OIRA), we expressed concerns about proposals under consideration for arbitration agreements.

In October, the CFPB released proposals for a potential rulemaking on forced arbitration. In this letter to the regulators, we noted that since credit unions have a unique relationship with members, they are more likely to know them, and are able to resolve conflicts in a quick and amicable fashion.

However, we noted that some credit unions choose to use arbitration as an alternative for dispute resolution, and that the arbitration process can be an important tool for credit unions and credit union members to resolve differences in a fair and efficient manner without engaging in time and cost consuming litigation.

The letter outlines some of the consumer benefits of arbitrations such as achieving a quicker resolution, without the cost and burden of litigation, and also outlines some of the problems with class action litigation for both credit union members and credit unions. For instance, we said that class action plaintiffs’ attorneys often fare much better in litigations and receive large sums of money than the actual aggrieved party. The letter also expressed concern about some of the problems with the CFPB creating yet another public facing database on their site. Specifically, we are concerned that this public information about arbitration awards could be used by those seeking to profit from frivolous class action litigation, rather than by actual consumers for their benefit.

We therefore urged the CFPB to engage in additional analysis before moving forward with a rulemaking, and to consider some of the problems associated with class action litigation.

We will continue to follow the progress of this rulemaking and continue our engagement with the CFPB on this issue.