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This week, we filed our comment letter in response to the CFPB’s proposed rule on arbitration, which prohibits class action waivers. We highlighted that among the many consumer protections associated with the mission of credit unions is the high quality service they provide to their members, which has prompted a successful system for quickly and amicably resolving disputes in the limited instances where they arise.
In our comment we noted that credit unions use arbitration clauses far less than others in the financial marketplace, but noted that there are some credit unions that do use them, and recent complexities in the regulatory environment have caused more credit unions to want to have the option to protect themselves from class actions in the future. We specifically highlighted the July 2015 Telephone Consumer Protection Act Order as one example of new confusing/conflicting guidance that could attract frivolous class action litigation. The letter highlighted a number of problems with enabling class action litigation against credit unions, and questioned whether this is in the best interest of members.
Specifically, we stated that it is difficult to imagine a case in which class action litigation against a credit union would be a reasonable course of action for credit union members since it would put them in a position of essentially having to sue themselves. We also pointed out that if a credit union faces class action litigation, the associated costs come out of the pockets of its members and can force resources away from high-quality and consumer friendly product and service offerings.
We strongly urged the CFPB to scrutinize the function of any rule not narrowly tailored to address specific consumer abuses, and determine whether it is in the best interest of consumers served by credit unions. Specifically, we asked them to use their section 1022 Dodd-Frank authority to exempt credit unions from this rule and highlighted that 399 Members of Congress have urged the CFPB to, “consider the benefits credit unions and community banks provide and ensure that regulations do not have the unintended consequences of limiting services or increasing costs for credit union members.”
Others in the credit union industry have also recently expressed similar, as well as additional, concerns.
We'll continue to follow the trajectory of this rulemaking and urge the CFPB to protect credit unions from unnecessary compliance burdens and frivolous class action litigation.
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Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.
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