Senator Al Franken and 57 other members of Congress signed a letter sent to Director Cordray last week urging the CFPB “to move forward quickly to use its authority under the Dodd-Frank Act to issue strong rules to prohibit the use of forced arbitration clauses in financial contracts and give consumers a meaningful choice after disputes arise.”
In March 2015, the CFPB delivered to Congress the final results of its empirical study of consumer arbitration as mandated by Section 1028 of the Dodd-Frank Act. The letter relies on what it calls a “substantial bedrock of evidence” in the study showing “the devastating effects of forced arbitration on tens of millions of consumers.”
The letter’s characterization of the study is not surprising since it is consistent with the CFPB’s negative characterization of arbitration in announcing the study’s results as well as the similar characterization in numerous media reports about the study. However, as we have previously commented, the data in the CFPB’s study conclusively demonstrates that arbitration is faster, cheaper and more beneficial for consumers than litigation, including class action litigation. This leads us to question how carefully Senator Franken and his colleagues read the study before sending their letter.