The (Consumer Financial Protection) Bureau (CFPB) shall conduct a study of, and shall provide a report to Congress concerning, the use of agreements providing for arbitration of any future dispute between covered persons and consumers in connection with the offering or providing of consumer financial products or services.” – Dodd-Frank Act, Section 1028(a).
“Delay is the deadliest form of denial,” said historian C. Northcote Parkinson. Unfortunately, this appears to be the path that some in the financial services industry want to follow – to distract and delay the CFPB’s decision-making and action on forced arbitration.
Last month, the Bureau received comments from the public on the Bureau’s study of predispute binding (a.k.a forced) arbitration. Many corporations insert an arbitration clause in their terms of service to block consumers from holding them accountable in court. If consumers are hurt or ripped off, they must take their claims to private, secretive tribunals that favor the companies.
Under the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act, the Bureau is required to study arbitration clauses that companies insert in contracts for consumer financial products and services, steering disputes with consumers into private arbitration proceedings instead of open court. After the Bureau completes its study, it may use its authority to limit or ban the practice.
Numerous public interest organizations submitted comments to the Bureau’s request for information on the study, see here, for example. The groups mostly asked for a thorough review of the issues relating to arbitration, including its impact on consumers and their ability, or lack thereof, to seek justice when they, individually or as a group, are financially injured by corporate wrongdoing.
As expected, the submissions from the financial industry were quite different. The re-occurring theme emerging from many of the industry submissions: distract and delay.