Nov 02 2017
Miss. Senator Voted Last Week to Eliminate CFPB’s Arbitration Regulation
WASHINGTON - U.S. Senator Roger Wicker, R-Miss., commended President Trump for signing legislation, cosponsored by the Mississippi Senator, to repeal an intrusive Consumer Financial Protection Bureau (CFPB) rule banning certain arbitration agreements between consumers and businesses. The rule would have harmed consumers by limiting their options to resolve financial disputes.
“From the beginning, CFPB has been a thinly veiled attempt by Washington liberals to supersede congressional authority and expand federal control over Americans’ financial decisions,” Wicker said. “I voted to protect consumers’ rights by repealing a regulation that would have encouraged frivolous class action lawsuits against American job creators.”
In July, the CFPB finalized an Obama-era rule to ban certain financial agreements from including arbitration agreements. Arbitration agreements help expedite the resolution of disputes between consumers and companies, while keeping prices low for consumers. The rule as written would have empowered trial lawyers to pursue lawsuits that deliver millions of dollars in fees each year and can severely limit the amount of money consumers receive for legitimate claims against businesses.
According to the CFPB’s own study, consumers recover an average of $5,389 when using arbitration, compared to $32 when a consumer participates in a class action suit. The study noted attorneys take an average of 21 percent of the cash award, and some take as much as 63 percent. Class action attorneys earned over $424 million dollars during the period studied. More than 60 percent of class actions resulted in no relief for class members, as the cases were either settled individually or withdrawn by the plaintiff. Only 12 percent of class actions even obtained a final class settlement.
The study also showed that arbitration is faster than class action suits. On average, disputes in arbitration were resolved in approximately five months, while class action lawsuits averaged about 23 months for completion. Arbitration can also be cheaper, with consumer costs capped at a $200 filing fee because businesses cover the remainder of the costs in arbitration.
Wicker cosponsored the Resolution of Disapproval of the CFPB rule on arbitration (S.J. Res. 47) this summer. The vote in the Senate was 51-50, with Vice President Mike Pence casting the tie-breaking vote.