More than 100 Democratic members of Congress, including 35 Senators, sent letters to the Consumer Financial Protection Bureau yesterday supporting the agency’s proposal to ban mandatory arbitration clauses in consumer lending.
Two letters were sent to the CFPB, one from the House of Representatives and one from the Senate. There is no question that the letters offered strong endorsements of the CFPB’s proposal.
The proposed rule is in the public interest and will protect consumers. As you know, Congress expressly granted authority to the Bureau to research the impact of forced arbitration clauses in financial products and services, and based on this evidence, to promulgate a rule to prohibit or impose conditions on the use of forced arbitration if the Bureau finds that it would be “in the public interest and for the protection of consumers.” There is little doubt that the Bureau’s proposed rule will serve these twin goals. As more than 200 of the nation’s leading law professors and scholars have observed, “class actions can serve as a powerful tool to help consumers of financial services and products vindicate their rights under federal and state law.”
On a substance basis, the letters did more than praise the CFPB for taking the step of proposing the rule, and use the CFPB’s own study on arbitration proposals as evidence of the need to ban them.
We commend the CFPB for its comprehensive study and for carefully considering extensive public input before issuing its final proposal. The agency’s notice of proposed rulemaking concludes that regulations restricting or prohibiting the use of forced arbitration serve the public interest, provide necessary protection for consumers, and are consistent with the findings in its study. We wholehemtedly agree, and we offer our strong support for the CFPB’s proposal that rightfully recognizes the expansive harms of forced arbitration, prohibits the unfair use of class action waivers, and requires greater transpm·ency concerning the arbitration of individual claims.
