Senate lawmakers may soon vote on S.J. Res. 47, introduced by Senator Mike Crapo (R-ID), which would use the powers under the Congressional Review Act (CRA) to rescind the Consumer Financial Protection Bureau’s (CFPB) costly rule banning arbitration agreements in certain consumer contracts.
Americans for Tax Reform (ATR) strongly urges lawmakers in the upper chamber to support and vote for this important resolution. Failure to use the CRA to rescind the arbitration rule would be a boon for trial lawyers, while conversely having negative impacts on America’s consumers.
In July ATR joined 26 other free-market, limited-government, and liberty-oriented groups in calling on Congressional lawmakers to use the power of the CRA to repeal the CFPB’s rule relating to arbitration agreements.
As outlined in the coalition letter, the CFPB’s arbitration rule doesn’t benefit American consumers and would flood courtrooms with class-action lawsuits putting more money in the pockets of trial lawyers. The rule would lead to a projected 6,000 class action lawsuits every five years.
The arbitration rule would also cost American consumers billions, as all of this work, money, and litigation would be wasted on an average payout of $2.00 per person, according to the CFPB’s own study. This is significantly lower than a payout from the arbitration process. Additionally, a mere 20 percent of class-action lawsuits are approved and among those the average wait time for a settlement is around 3 years, compared to the arbitration process wait time of only 6.9 months.
The House of Representatives in July passed their version of the CRA resolution rescinding the arbitration rule. Now lawmakers in the Senate should do the same by passing Senator Crapo’s S.J. Res. 47, rescinding this harmful and costly rule put forth by the CFPB.
Photo credit: David