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Trade Groups Sue CFPB over Arbitration Rule "Credit News 24"

The American Bankers Association, the U.S. Chamber of Commerce, the Consumer Bankers Association, the Financial Services Roundtable and several other national and regional trade associations on Friday filed suit in federal court to block the Consumer Financial Protection Bureau’s arbitration rule from taking effect.

The lawsuit was filed in the U.S. District Court for the Northern District of Texas, Dallas Division.

The groups challenged the rule on several grounds: that the Consumer Financial Protection Bureau (CFPB) itself is unconstitutional (a claim currently being appealed), that the CFPB violated the Administrative Procedures Act (APA) in its rulemaking, and that the bureau violated the Dodd-Frank Act by precluding use of a consumer-benefiting dispute mechanism.

“For years, our organizations have tried to work with the CFPB to promote strong consumer protection while maintaining a functional arbitration system,” the plaintiffs said in a joint statement. “Unfortunately, the CFPB chose to instead finalize a rule that will harm consumers and businesses by effectively banning arbitration and increasing speculative class action litigation. As Congress continues to consider action within its purview, we are filing this challenge to ensure all legal remedies are utilized to preserve arbitration for consumers.”

By ignoring the results of its own study, which showed that consumers who prevail in disputes under arbitration win 166 times the award that successful class action plaintiffs do, the bureau acted arbitrarily and capriciously in violation of the APA, the lawsuit said.

Read the lawsuit.
Title : Trade Groups Sue CFPB over Arbitration Rule "Credit News 24"
link : Trade Groups Sue CFPB over Arbitration Rule "Credit News 24"