July 10, 2017
The CFPB proposal will have a negative impact on consumers. As illustrated in CFPB’s own study, arbitration is a simpler, more flexible, faster and more confidential process than taking lawsuits to court. Class-action lawsuits result in millions of dollars in legal fees but provide little or no benefit to consumers. According to the CFPB’s own numbers, an average class action lawsuit member received just $6.29, while the lawyers leading the case received millions.
Typically, arbitration results in much higher returns for consumers. The CFPB’s data establishes that consumers won 47 cents on the dollar in arbitration cases where they received a recovery, versus minimal payments received by class action participants. Banning mandatory arbitration clauses will deprive consumers of these benefits. Moreover, while trials must be scheduled into busy court calendars, arbitration hearings can be scheduled more easily and during non-business hours. We hope the CFPB’s final regulation will put consumers first.