The American Bankers Association this week, along with 13 other organizations, sent a joint letter to the CFPB urging the bureau to deny a recent petition for rulemaking to ban pre-dispute arbitration provisions in contracts for consumer financial services.
Relying on protections enacted by Congress, “numerous businesses, including many companies that provide financial products or services, have for decades resolved consumer disputes by arbitration rather than through costly and burdensome litigation in our overburdened court system,” the groups wrote, noting that arbitration reduces transaction costs and provides “fair and efficient” dispute resolution.
According to the organizations, the bureau lacks the statutory authority to enact such a rule. They also argued that any such regulation would “harm businesses without any benefit to consumers” and violate at least four congressional mandates: the Congressional Review Act, the Dodd-Frank Act, the Federal Arbitration Act, and the Administrative Procedure Act.
