Lender trade associations reacted forcefully, and predictably, to criticism from the Consumer Financial Protection Bureau over proposals to restrict binding arbitration clauses from finance contracts, such as motor vehicle retail installment contracts.
“We are disappointed the bureau, despite numerous studies and the CFPB’s own report, is choosing to side with trial attorneys over the interests of consumers,” said Richard Hunt, president and chief executive of the Consumer Bankers Association, in a written statement last week.
At a “field hearing” on arbitration in Dallas, CFPB Director Richard Cordray set the tone when he said corporations use arbitration clauses to “rig the game” against consumers by making it impossible to file class-action lawsuits.
The American Financial Services Association also countered in a written statement that the CFPB “does not provide any meaningful link between arbitration and class-action lawsuits.”
AFSA and the CBA said arbitration is consumer-friendly because it is faster and more efficient than lengthy lawsuits. “In essence, the rules that the bureau is proposing would deprive consumers of a low-cost, lawyer-free dispute resolution system and replace it with an expensive, lengthy, and complex judicial process,” AFSA said.
For more content like this, check out the upcoming Auto Finance Summit, October 21-23 at Wynn Las Vegas. Visit www.AutoFinanceSummit.com for more information.
