Professor Jeff Sovern has responded to our recent blog, “Senator Warren’s Numbers Don’t Add Up,” with a blog of his own. He does not contest the main point of our blog, which was that Senator Warren’s claim that consumers don’t do well in arbitration is wrong. He admits he found our discussion “interesting.” We appreciate the compliment.
Professor Sovern does take issue with the short discussion near the end of our blog in response to Senator Warren’s remark that consumers rarely pursue individual arbitration. We explained that most consumers resolve their disputes through companies’ informal dispute resolution procedures and also through on-line complaint portals provided by federal and state agencies. “Is it true,” he asks, and where are the “statistics”? Well, one such statistic is on the front of the CFPB’s website: the CFPB, through its on-line complaint portal, has handled more than 1.2 million customer complaints, and 97% of consumers get timely replies when the CFPB sends their complaints to companies. In fact, according to the CFPB, its consumer complaint portal helps generate broad relief in the marketplace:
How one complaint can help millions
97% of complaints sent to companies get timely responses.
By submitting a complaint, consumers can be heard by financial companies, get help with their own issues, and help others avoid similar ones. Every complaint provides insight into problems that people are experiencing, helping us identify inappropriate practices and allowing us to stop them before they become major issues. The result: better outcomes for consumers, and a better financial marketplace for everyone.
What do class actions accomplish for consumers that is better than this? Professor Sovern concedes that few putative class members submit settlement claim forms even when they are entitled to payment. That is a problem that “bedevils class action claims,” he admits. He also argues that “class actions … deter misconduct in a way that arbitration claims don’t.” But you don’t need arbitration or class actions to deter alleged misconduct when agencies such as the CFPB are already doing so through their enforcement activities, without charging a hefty attorneys’ fee. Here, again, the first page of the CFPB’s website states that its enforcement actions have brought more than $11.9 billion in relief to more than 29 million consumers. And the CFPB maintains a public database of the consumer complaints it receives. That is also a significant deterrent.
Finally, Professor Sovern criticizes our argument that the number of consumer arbitration filings is attributable in part to the fact that the CFPB has not spent any resources educating consumers about arbitration. He states, “I am not aware of any evidence that consumers can be usefully educated about arbitration.” That is a surprising position for a legal educator to take. Unlike Professor Sovern, we are optimistic that consumers can be “usefully educated about arbitration” and that more education would help consumers recognize the many benefits that arbitration can provide if other means of resolving a dispute are not successful.