Aug. 3, 2016
More Than 100 Lawmakers Applaud CFPB’s Proposed Rule Limiting Forced Arbitration
38 Senators and 65 Representatives Back the Rule
WASHINGTON, D.C. – Today, more than 100 U.S. senators and representatives sent letters to the U.S. Consumer Financial Protection Bureau (CFPB) applauding the agency’s proposed rule to restore consumers’ right to join together to hold corporations accountable when they break the law. The rule would limit the financial industry’s use of forced arbitration, an abusive tactic in which corporations bury “rip-off clauses” in the fine print of take-it-or-leave-it contracts to block consumers from challenging in court predatory practices such as hidden fees, fraud and other illegal behavior. The rule is open to public comment through August 22.
The Senate letter (PDF) – led by U.S. Senate Minority Leader Harry Reid (D-Nev.) and Sens. Al Franken (D-Minn.), Patrick Leahy (D-Vt.) and Sherrod Brown (D-Ohio) – stressed that forced arbitration “shields corporations from accountability for abusive, anti-consumer practices, which only encourages unscrupulous business practices by allowing violations of the law to go unchecked… at the expense of consumers, small businesses, and – just as importantly – law abiding businesses.” The 38 senators went on to “commend the CFPB for its comprehensive study and for carefully considering extensive public input before issuing its final proposal.”
The U.S. House of Representatives letter (PDF) – spearheaded by U.S. Rep. Maxine Waters (D-Calif.), Hank Johnson (D-Ga.) and John Conyers (D-Mich.) – hailed the rule as “a critical step to protect the public interest by ensuring that consumers receive redress for systemic unlawful conduct.” The 65 representatives concluded that the CFPB’s “comprehensive study on forced arbitration unequivocally demonstrates that the proposed rule is necessary to the public interest and consumer welfare” and emphasized that Congress “entrusted the Bureau with authority to extend these protections to the rest of the financial services marketplace.”
“These strong statements from more than 100 members of Congress reflect the mounting public outrage over forced arbitration,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division. “As advocates drag this abusive practice out of the shadows, the American people are demanding action to curb corporate scams that threaten our most fundamental rights.”
These letters add to the broad support the CFPB’s proposed rule has received thus far. In April, 164 organizations that advocate on behalf of consumers, students, civil rights, labor, small businesses and more – led by Public Citizen and Americans for Financial Reform – sent a letter to the CFPB urging the agency to restrict forced arbitration.