NTU urges all Representatives to vote “YES” on H.J. Res 111, to repeal the Consumer Financial Protection Bureau (CFPB) arbitration rule. Failure to reverse this regulation will result in a barrage of class-action lawsuits that will impact economic growth and provide little benefit to consumers.
According to CFPB data, the elimination of arbitration will result in an additional 1,200 class-action lawsuits annually. The added litigation costs will be passed directly onto consumers who will pay higher fees and have fewer services. At the same time, taxpayers will pay for the added burden on the court system and will have to wait longer for court decisions. Arbitration is a timely and efficient process for resolving disputes at a fraction of the cost of expensive drawn-out litigation.
A CFPB study even recognized that consumers are more likely to win compensation from arbitration than class-action lawsuits. The average consumer payout in arbitration cases is over $5,000 compared to an average payout of $32 in a class action lawsuit. Further, the costs are far cheaper for consumers in arbitration cases. In 2016, the average attorney’s fee in financial services arbitration was $1,422, compared to the average class action attorney’s fee of over $1 million.
The proposed rule is further evidence that reforms, such as those in the CHOICE Act, must be made to rein in this unaccountable agency. As the Congressional Review Act only provides 60 legislative days for the Congress to reverse this regulation, we urge the passage of this resolution before the opportunity passes.
Roll call votes on H.J. Res 111 will be included in our annual Rating of Congress and a “Yes” vote will be considered the pro-taxpayer position.
If you have any questions, please contact NTU Policy and Government Affairs Associate Thomas Aiello at (703) 299-8680