Removing Barriers Blog

Credit Union Difference Highlighted Before House Judiciary Hearing on Forced Arbitration
Posted May 16, 2019 by CUNA Advocacy

Earlier today, CUNA wrote to Chairman Nadler and Ranking Member Collins prior to the Judiciary Committee’s hearing on “Justice Denied: Forced Arbitration and the Erosion of Our Legal System.”

The letter highlighted the credit union difference and the many consumer protections associated with the credit union mission. 

"As one of the only consumer-owned cooperatives in the financial marketplace, credit unions have a long tradition of protecting their members’ interests. 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. Credit unions have achieved this great success as consumer protectors without the intervention of unscrupulous plaintiff’s attorneys, who often do not know the credit union’s members nearly as well as the credit union does. Arbitration can be an efficient means to resolve legal disputes between parties and the choice to use arbitration is highly dependent on each credit union’s internal policies, priorities, and resources."

As arbitration is merely one tool amongst many, CUNA would be concerned with any legislation attempting to arbitrarily restrict the availability of arbitration to resolve disputes. Although arbitration may not an appropriate forum in every dispute, it certainly can be the appropriate forum to resolve some disputes. Notably, credit unions are less likely to have or to enforce arbitration clauses than many others in the financial services marketplace; however, there are credit unions that have them as part of their agreements and believe it is important to preserve options for limiting class action litigation. Particularly, because of the unique size and structure of credit unions, class action litigation is far from the most efficient and effective way to resolve a dispute, since it essentially puts member-owners in a position of having to sue themselves and deplete the resources of the membership as a whole.