The American Bankers Association, along with two other trade groups, sent a letter to the Consumer Financial Protection Bureau on Friday urging the consumer watchdog to study consumer arbitration in designing its pre-dispute arbitration agreements.
“[We] firmly believe that arbitration offers consumers and covered persons greater benefits than either individual or class-action litigation, and that those benefits—which include streamlined proceedings, informality, reduced cost and speed, as well as ease of access—have never been more important than they are in today’s economy,” the letter said.
Under Section 1028 of the 2010 Dodd-Frank Act, the CFPB is required to conduct a study on and report to Congress the use of arbitration agreements in relation to financial services and products. The agency is currently seeking public comment on the required study.
The CFPB may “by regulation…prohibit or impose conditions or limitations on the use of [such] an agreement” if the agency “finds that such a prohibition or imposition of conditions or limitations is in the public interest and for the protection of consumers.”
The groups noted that the request for comment stated that comments should be restricted to the scope of, methods used in and data sources for conducting the study.
“[We] urge the [CFPB] not to limit itself to the specific questions posed in the [r]equest and, instead, study consumer arbitration as it occurs to consumers in their daily lives—that is, as part of the continuum of interaction with covered persons,” the letter said. “In addition, the [CFPB] should take into account the many times of informal dispute resolution processes, including those error and dispute resolution procedures provided by federal and state law, those maintained internally by businesses and those offered by regulatory agencies and private organizations.”
The groups also urged the CFPB to not rely solely on published consumer arbitration studies but to update studies that are outdated or contain information gaps.