107 Groups Urge CFPB to Write Rule to Prohibit Forced Arbitration

Release Date: 
March 24, 2015
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 In a letter released today, over 100 organizations, reacting to the Consumer Financial Protection Bureau’s (CFPB) recently released study on arbitration, urged the agency to “prohibit forced arbitration clauses in contracts for consumer financial services and products under its jurisdiction.” 

“Few practices are as abusive, unfair, and deceptive as the widespread use of forced arbitration clauses in most consumer contracts, including credit cards, student loans, debt settlement, credit repair, auto financing, and payday loans,” the national, state and local groups said in the letter. “The CFPB study verified the prevalence of forced arbitration clauses and class action bans in consumer finance contracts and found that the clauses impacted tens of millions of consumers. According to CFPB data, forced arbitration eradicates consumer claims. As the financial industry knows, most consumers cannot and do not use the arbitration forum on an individualized basis.”

The letter concluded, “We believe that the final results of the CFPB arbitration study offer concrete evidence that the use of forced arbitration clauses is harmful to consumers, and therefore, it is in the public interest and in the interest of consumer protection to prohibit the practice.”