Members Urge Swift Action to Finalize Rule to Restore Consumers’ Rights
WASHINGTON – 65 House Democrats, led by Reps. Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services; John Conyers, Jr. (D-MI), Ranking Member of the Committee on the Judiciary; and Henry C. “Hank” Johnson, Jr. (D-GA), Ranking Member of the Subcommittee on Regulatory Reform, Commercial and Antitrust Law, sent a letter to the Consumer Financial Protection Bureau expressing strong support for its proposal to limit forced arbitration in consumer contracts.
The rule would ban class-action waivers in forced arbitration agreements for financial products and services, restoring consumers’ right of action when harmed by financial institutions. In the letter to Director Richard Cordray, the Members wrote that the proposed rule “is a critical step to protect the public interest by ensuring that consumers receive redress for systemic unlawful conduct.”
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, Congress directed the CFPB to research the impact of forced arbitration clauses and promulgate a rule that would be in the public interest and for the protection of consumers. The CFPB proposed the rule in May after conducting a three-year, in-depth study on the landscape of consumer arbitrations.
“By restricting class actions and class-wide arbitration in consumer contracts, these clauses enable corporations to avoid public scrutiny by precluding access to the courts,” the letter states. “This is particularly problematic for small, diffuse misconduct that harms innumerous consumers.” The Members encouraged Director Cordray to proceed quickly on the rule “to ensure that consumers have equal protection under the law.”