On Tuesday, March 10, the Consumer Financial Protection Bureau (CFPB) released its final report on the use of arbitration in financial services and products. The results were devastating. The message is clear. The CFPB has the evidence it needs to write a rule to restore consumers’ choice to go to court to resolve disputes. Here are some reactions to the study:
Center for Responsible Lending: Today’s report makes what we’ve known crystal clear: forced arbitration clauses limit consumer relief and have no place in a fair marketplace. While companies claim that arbitration is simpler, easier, and cheaper than taking a case to court, they fail to mention that the forced arbitration rarely provides the same kind of discovery, impartiality, or meaningful review that can be achieved in courts of law. Read more.
Because Finance Is Boring: One of the main issues with forced arbitration is that it can be used to deny customers the ability to band together in a class action case. This denies consumers the ability to get justice, as it forces them to fight their case alone. Rather than spend the money to go to arbitration, most consumers simply give up. Read more.
Consumer Federation of America: In its Arbitration Study released today, the Consumer Financial Protection Bureau (CFPB) found that across substantially all consumer finance markets, pre-dispute forced arbitration clauses are extremely prevalent and detrimental to consumers’ ability to seek legal relief when they are wronged. Moreover, the vast majority of consumers are not aware that these clauses exist and do not fully understand how these clauses can be used to deny their access to court. Read more.
Public Justice: The CFPB has found overwhelming empirical evidence to suggest that forced arbitration keeps consumers from being able to protect themselves. Read more.
Americans for Financial Reform: In its latest study of forced arbitration, the Consumer Financial Protection Bureau (CFPB) confirms what consumers and consumer advocates have long said about this practice: it is a private dispute system stacked against individuals seeking justice. AFR applauds the release of the CFPB’s report, and urges the Bureau to move forward swiftly with rulemaking to prohibit forced arbitration in consumer financial contracts. Read more.
Public Citizen: The CFPB arbitration study released today shines a light on harsh realities for consumers in the financial marketplace, and these realities call for an immediate fix. The data show that pre-dispute forced arbitration clauses not only restrict the rights of consumers of traditional products – such as credit card and checking accounts – they also affect non-bank products in the financial sector such as payday loans. Read more.
Consumers Union: Basic legal protections have no meaning if companies can’t be held accountable under the law. The CFPB report clearly demonstrates why forced arbitration clauses are unfair to consumers and undermine the rule of law. Read more.
National Association of Consumer Advocates: Because over 90 percent of these clauses require consumers to pursue their claims on their own, many consumers never have an opportunity to have their claims heard. Forced arbitration isn’t an alternative forum for resolving disputes; it’s a get-out-of-jail free card for corporations. Read more.
American Association for Justice: For too long, Wall Street has been able to cheat, steal from, and harass American consumers without ever being held accountable by the very people who keep them in business – and completely evade crucial consumer protection laws that are designed to ensure even the most powerful financial institutions follow the rules. Read more.
Alliance for Justice: Under the Dodd-Frank Act, CFPB was instructed to study forced arbitration. That law also gives CFPB the authority to prohibit forced arbitration clauses in consumer financial products if it finds that such a prohibition would be in the public interest. The report adds to the overwhelming body of evidence that such a prohibition is not just in the public interest, but is vital to ensure companies will be held accountable when they harm everyday Americans. Read more.
National Consumer Law Center: The study also confirms that consumers have absolutely no idea they are giving up constitutional rights and surrendering their day in court. In fact, fewer than seven percent of the consumers surveyed by the CFPB that are covered by arbitration clauses realized that the clauses restricted their ability to sue in court. Read more.
Public Investors Arbitration Bar Association: We continue to support the idea of giving consumers greater flexibility to pursue their claims in either court or arbitration after a dispute arises. The CFPB report provides new and welcome support for our position in this matter. We believe that it is high time for the SEC to face the facts that wronged American investors should have a choice as to how they resolve their complaints. Read more.
Center for Justice and Democracy (Thepoptort.com): Today, the federal Consumer Financial Protection Board released an extraordinary study – over 700 pages long – finding that these clauses indeed keep lawsuits from being filed, forcing consumers with disputes with banks, credit card companies, payday lenders and so on, into private, rigged corporate system. Read more.
National Employment Lawyers Association and The Employee Rights Advocacy Institute For Law & Policy: The evidence and data compiled in the CFPB study indicating that forced arbitration clauses and class action waivers are harmful to consumers also holds true for America’s workers. Read more.