Congress Votes to Tables CFPB Financial Institutions Forced Arbitration Rule
The Senate recently voted to table the Consumer Financial Protection Bureau’s (CFPB) final rule on arbitration agreements and class-action lawsuits. The Vice President had to vote in the Senate and broke the tie (50-50). Senators Lindsey Graham (S.C.) and John Kennedy (La.) broke from their party to vote against the repeal. The House had voted in July to table the regulation. The motion to table the rule was supported by the U.S. Chamber of Commerce, the American Bankers Association and was opposed by consumer groups, FRA and other veteran/military associations. In July, FRA signed onto The Military Coalition (TMC) letter of support for CFPB’s final rule. This proposed rule addresses the harm of forced arbitration by preserving the ability of service members and other consumers to band together to seek relief through the civil justice system when financial institutions break the law.
Forced arbitration is a system where service members’ claims against a corporation are funneled into a rigged, secretive system in which all the rules, including the choice of the arbitrator, are picked by the corporation. Forced arbitration clauses also include a provision banning the rights of consumers to ban together to hold a corporation accountable.
Our service members protect our nation against both foreign and domestic threats. The sacrifices they and their families make in order to serve are compelling reasons alone to ensure they are not only shielded from predatory financial practices and unscrupulous lenders, but are also able to use our civil justice system if and when violations arise.
FRA will continue to ensure that the Servicemembers Civil Relief Act (SCRA) is enforced by regulatory agencies, including the Consumer Financial Protection Bureau (CFPB) and the Office of Military Affairs. The Association will work to make mandatory arbitration agreements in financial contracts unenforceable, and will continue our efforts to protect active duty personnel from predatory lenders.