Mon, Oct 2, 2017
The CFPB’s arbitration rule is now headed for court.
On Friday, the U.S. Chamber of Commerce, American Bankers Association, American Financial Services Association, Consumer Bankers Association, Financial Services Roundtable and a coalition of associations located throughout Texas filed a legal challenge to the CFPB’s rule that prohibits the use of class action waivers in arbitration clauses.
The lawsuit was filed in the Northern District of Texas, Dallas Division and comes as the Senate is considering a repeal of the rule. The House voted to overturn the rule in July.
The legal challenge rests on several grounds, including that the rule violates the requirements of the Dodd-Frank Act because the CFPB study was flawed and based on biased data, and because the rule is harmful to consumers.
The five national association co-plaintiffs offered a joint statement.
“For years, our organizations have tried to work with the CFPB to promote strong consumer protection while maintaining a functional arbitration system,” they said. “The CFPB’s own study found that arbitration provides more benefits to consumers than class action lawsuits. Unfortunately, the CFPB chose to instead finalize a rule that will harm consumers and businesses by effectively banning arbitration and increasing speculative class action litigation.