Senate Blocks Harmful Arbitration Rule
October 27, 2017
This week, the Senate passed legislation through the Congressional Review Act process to nullify the Consumer Financial Protection Bureau’s (CFPB) Final Rule on Arbitration. The vote, which took place on Tuesday night, passed the Senate 51-50. This action effectively stops the regulation from going into effect and blocks the CFPB from issuing a similar rule that could have the same damaging effects on consumers.
NBPCA has long been concerned that this rule would have negative effects on consumers, by depriving them of an important manner to resolve disputes. This regulation did not adequately consider the costs placed on consumers or financial service providers. In fact, the CFPB’s own empirical study of arbitration agreements found them to faster, less expensive, and ultimately more effective than class action lawsuits as a way for consumers to resolve disputes with companies.
Beyond the negative consumer impacts, the final rule was widely seen as an overreach of the CFPB’s authority. According to the Office of the Comptroller of the Currency (“OCC”), the CFPB failed to conduct a sufficient cost-benefit analysis of the final rule’s effect on consumers.
Time and again, arbitration agreements have proven to be convenient and inexpensive ways to resolve consumer disputes. With the vote this week, Congress helped safeguard consumer choice and freedom. NBPCA is committed to ensuring consumers continue to enjoy the benefits of the latest innovations taking place in the prepaid industry while allowing for the option to resolve conflict quickly and affordably.