ETA Submits Comments to the CFPB Regarding Proposed Arbitration Rules

August 22, 2016 –  ETA today submitted comments in response to the Consumer Financial Protection Bureau’s (CFPB) proposed rules on arbitration. ETA argues that the rules will not serve the public interest or protect consumers and are not consistent with the Arbitration Study the CFPB conducted pursuant to the Dodd-Frank Act.

Arbitration has quickly become the most popular and reliable way to resolve conflicts in a cost-effective and timely manner.   Arbitration is less expensive, faster and more flexible for both consumers and financial institutions. The CFPB’s Arbitration Study showed that consumers fared far better financially in arbitrations than in class actions and that arbitration cases were resolved much more quickly than class actions.  The study did not reveal any evidence that arbitration was harmful to consumers, unfair to consumers or otherwise injurious to the public interest.

The CFPB downplays the enormous and economically inefficient costs service providers will incur if the proposed rules are adopted and overstates the benefits to consumers of class action lawsuits. For example, the CFPB fails to support its assertion that service providers will improve their compliance efforts if they are potentially subject to class action litigation.

Arbitration is an important and economically efficient means of addressing commercial disputes. That is why many financial services contracts choose to use arbitration as an alternative to expensive and time consuming litigation. Before moving forward, the CFPB should consider the consequences of restricting or eliminating the use of arbitration for U.S. consumers, who could ultimately lose an important avenue for resolving potential conflicts.

For media inquiries, contact Meghan Cieslak at 202-677-7406 or [email protected].

About ETA

The Electronic Transactions Association (ETA) is the global trade association representing more than 500 payments and technology companies. ETA members make commerce possible by processing more than $5 trillion in purchases in the US and deploying payments innovations to merchants and consumers. Learn more: www.electran.org.