Comment Letter to the CFPB Regarding Proposed Rule (PDF)
Appendix: Comment Letter to the CFPB Regarding Proposed Rule (PDF)
Consumers Want the Right to Resolve Bank Disputes in Court (PDF)
Pew Endorses Proposed CFPB Rule on Pre-Dispute Arbitration
On Aug. 18, The Pew Charitable Trusts sent a letter to the Consumer Financial Protection Bureau (CFPB) in support of the bureau’s proposed rule on pre-dispute arbitration. The draft regulation would prohibit the use of pre-dispute arbitration clauses in financial agreements as a means to avoid class action lawsuits and would allow the CFPB to collect data on arbitration proceedings.
Class actions are often the only viable remedy for consumers who are treated unlawfully, and the widespread use of pre-dispute arbitration clauses with class action bans makes this rule vital for the protection of consumers and the promotion of a fair and level financial playing field.
Pew urges the Consumer Financial Protection Bureau to expeditiously finalize rules that give consumers the ability to choose how they pursue a dispute.
Many contracts for credit cards, checking accounts, prepaid cards, and other financial products include mandatory arbitration clauses, which forbid consumers from settling disputes in court, either individually or as part of a group (or class action), and require them instead to participate in arbitration. In October 2015, the Consumer Financial Protection Bureau announced that it was considering a ban on mandatory arbitration agreements that prohibit class actions. In light of our research showing that these clauses inflict harm by limiting customers’ recourse, Pew urges the CFPB to institute the ban promptly.
In a recent survey, The Pew Charitable Trusts asked consumers their opinions about mandatory binding arbitration. One issue in particular rankles them and is now under scrutiny by regulators: the ubiquitous inclusion in arbitration agreements of language that bars customers from pursuing their claims against a financial services company as part of a class action.
