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Rep. Sean Duffy (R-WI), chairman of the House Financial Services Subcommittee on Oversight and Investigations, sent a letter to CFPB Director Richard Cordray on April 20 informing him of a Congressional investigation into the CFPB's formation of the arbitration rule. The letter seeks information about communications between consumer advocacy and trial attorney groups including the American Associations for Justice, National Consumer Law Center, National Association of Consumer Advocates, Alliance for Justice, and Public Justice, as well as relevant records and memorandums.
The letter gave the CFPB a deadline of May 4, the day before the arbitration field hearing, to respond.
Also, in a letter sent May 2, the U.S. Chamber of Commerce asked Director Cordray for certain clarifications during the hearing to “increase transparency” specifically about whether benefits to limiting arbitration outweigh consequences of eliminating the option for consumers.
The letter states, “First, it would be helpful if, in your remarks, you would provide the Bureau’s views on whether a rule prohibiting class action waivers will have the practical effect of eliminating consumer arbitration from the financial services marketplace. The Bureau’s 2015 arbitration study very clearly points out the comparative benefits of arbitration over individual litigation: arbitration is cheaper, faster, and more effective at delivering relief to consumers. The study thus demonstrates that it is in the public interest to preserve arbitration as a dispute resolution system that serves as an alternative to overcrowded courtrooms, where consumers have to pay hundreds of dollars just to be heard and can wait years for a decision. The demonstrable benefits of arbitration over individual litigation are probably why the Bureau is not proposing to ban pre-dispute arbitration agreements directly.”
There have been some indications that there could be a judicial challenge to rule by the Chamber or others.
CUNA previously joined a letter to the U.S. Senate and House appropriation committees, expressing concerns that the CFPB failed to adequately study the use of arbitration clauses before issuing a proposal that could restrict their use, and urged Congress to block the Bureau from finalizing its plan in the absence of such a study.
We continue to monitor other Congressional and third-party activity surrounding this rulemaking.
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