Newsroom

August 23, 2016

Sasse, McHenry raise arbitration concerns

Sen. Ben Sasse, R-Neb., and Rep. Patrick McHenry, R-N.C., were joined by a group of 140 members of Congress this week in raising their concerns about CFPB's proposal to prohibit the use of arbitration agreements to limit consumer access to class action litigation.

The letter to CFPB Director Richard Cordray on Monday was signed by 36 senators and 104 representatives.

"The Bureau's proposal on arbitration agreements is at odds with its stated mission to ‘make consumer financial markets work for consumers,' " the lawmakers wrote. "The proposal seeks to substantially reduce the use of a highly-effective, low-cost and fair process for resolving disputes, forcing consumers to address their grievances through our very expensive, overburdened legal system."

"We fail to see how a proposal that limits consumer choice and increases legal fees is consistent with the mission of the Bureau," they continued.

NAFCU believes consumers should have access to fair and efficient methods of dispute resolution, and the association has raised concerns that the rule could limit the availability of voluntary arbitration and create burdensome reporting requirements for credit unions.

NAFCU has also cautioned CFPB about its plan to collect and publish arbitration data, which could create reputational risk, raise privacy concerns and encourage frivolous lawsuits.