In a statement for the record of a Senate Banking Committee hearing today, the American Bankers Association said it will continue to oppose legislative efforts to limit the use of arbitration clauses in private contracts, including S. 505, the Forced Arbitration Injustice Repeal Act that lawmakers are currently considering.
ABA noted that banks use arbitration because it is “fair and more consumer-friendly than litigation,” and that “eliminating arbitration clauses will only benefit class action lawyers and will harm consumers by replacing a cost-effective and fair arbitration process with expensive and time-consuming litigation.” The association added that the majority of customer disputes with their bank do not require arbitration, and in cases when they do, consumers receive $5,389 on average, compared to just $32.35 in litigation, according to CFPB data.
ABA previously advocated successfully for the repeal of a controversial 2017 CFPB rule that sought to prohibit customers from waiving their ability to participate in class action suits and drastically limit the use of mandatory arbitration agreements for financial products and services. That rule was overturned by Congress under the Congressional Review Act, which gives lawmakers the authority to reject new regulations.
